After a dip in investments last year, Intel Capital, the venture capital program of Santa Clara, California-based Intel, expects an increase this year, according to a company executive. Investments by Intel Capital this year are expected to be close to US$400 million compared to about $360 million last year, said Claude Leglise, vice president and director of worldwide geographies sector at Intel Capital.
"It is a guess and not a commitment, as we don't have either a financial target or a target for number of deals," Leglise cautioned. " It really depends on what is out there that is exciting." In 2000, investments by Intel Capital amounted to $1.4 billion.
This year Intel Capital is investing in a variety of companies, including businesses working on fuel cells, technologies for displays that consume less energy, 3G (third generation) communication, wireless connectivity to laptop computers via the 802.11 specification, and "last-mile" broadband solutions.
Even though some markets like telecommunication are still lackluster, Intel Capital thinks this is a good year for new investments. "When you are trying to sell, you want to sell this week," said Leglise. "When you are investing, you have to take a two, three, five-year horizon, so the good ideas that are being developed today, will pay off maybe in three years, and that is okay with us as investors. One thing we are sure is that things will get better."
The drivers for new investment opportunities are an expected rebound in the PC market, a shift in the cell phone industry from embedded voice-only devices to programmable computing platforms, Web services, large data sets that will require servers built around 64-bit microprocessor architectures, and broadband to the home and small businesses, according to Leglise. All these are markets that Intel sells into. Intel Capital invests in companies that have technologies or offer services that can help boost Intel sales.
Last year 45 percent of Intel Capital's investment was outside the U.S., with Asia, excluding Japan, attracting 25 percent of the about $360 million investment. Chinese and Indian companies each constitute one-third of Intel Capital's portfolio of companies in Asia.