Indian workers are cheaper to employ than their US counterparts

The firm will spend $800m on boosting its research and development operation, with the rest of the cash being used to finance investment in firms.

Intel has an R&D centre in Bangalore that produces software to drive its microchips, computers and networks.

Firms like Intel are expanding in India as the wages of software engineers are fraction of what they cost in the US.

Reports estimate that the average wage for a software engineer in India is less than a sixth of that for a similar professional in the US.

Time to grow

Intel's division in Bangalore is the company's biggest non-manufacturing operation outside of the US.

Chairman Craig Barrett announced the investment plans on Monday during a trip to south Asia.

"We will grow our local operations, boost venture capital investments and work closely with the government, industry and educators," Mr Barrett said.

Intel said it was in talks with the government about manufacturing chips in India, although it added that it had yet to make a decision as to when, if at all, that would happen.