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The Moscow Times, May 26, 2004

Intel Hires 600 Local Computer Specialists

By Alex Nicholson, Staff Writer

Intel, the world's No. 1 maker of microchips, has hired some 600 Russian computer specialists, more than doubling its research capacity in the country.

Moscow-based Elbrus and its Novosibirsk subsidiary Unipro -- two prominent but cash-strapped research centers -- signed an agreement last week with Intel Capital, the corporate development branch of the California-based company. The deal will swell Intel's Russian ranks to 1,000, giving hundreds of researchers, programmers and engineers significant pay raises. Neither side would comment on wages, but one industry watcher said that specialists could expect a monthly salary of between $2,000 and $3,000.

Intel will also receive licensing rights to its new specialists' patents. "This makes Russia a very significant research and development center for us," Intel spokesman Christian Anderka said by telephone from the company's European headquarters in Munich. "This is part of our commitment to invest in growing economies." The deal will be finalized with U.S. and Russian government agencies within 90 days, the company said.

Intel CEO Craig Barrett is to fly to Russia later this year to meet the new hires and discuss future investment plans with government representatives. Western tech giants are finding it hard to resist moving to countries like Russia, Brazil, China and India. A booming economy and large numbers of well-educated people willing to work for low wages means IT and telecom corporations are increasingly moving jobs to developing markets. "Instead of outsourcing them, we hired them," said Intel's U.S. spokesman Chuck Mulloy, CNET news reported. Rather than sign short-term contracts with Intel, Elbrus and Unipro employees will actually be on the U.S. firm's payroll.

In the past, Intel's research and development capacity in Russia has been software-heavy, Anderka said, meaning Elbrus' cutting-edge work designing microprocessors for supercomputers will be a welcome addition. Contracts with Elbrus' other clients would be completed, and teams currently finishing work on the government-commissioned E2K and Elbrus microprocessors would not be transferred immediately to the Intel payroll, said Boris Babayan, Elbrus' founder and chief technical officer. Feted as Russia's answer to Seymour Cray, the supercomputer pioneer, Babayan worked on developing some of the Soviet Union's most powerful computers. While neither party would reveal the value of the deal, Babayan said that researchers' wages had been increased significantly.

"This is very good news, it means we can continue our creative work at a high level," he said. "We hope that the ideas that are born in our teams here in Russia will find the broadest possible application." Intel spends some $4 billion per year on research and development. The deal will add Intel research centers in Novosibirsk, St. Petersburg and Moscow to the company's existing locations in Nizhny Novgorod and Sarov. Unipro, an Elbrus subsidiary, will chiefly provide software development services, Ivan Golosov, the company's general director, said by phone from Novosibirsk. Intel has hired 190 Unipro specialists, he said.

Rival computer giant Sun Microsystems said Intel's latest brain harvest could take time to take effect. "The question is whether the corporate culture is able to absorb the international intellectual potential," said Sergei Moiseyev, marketing director with Sun Microsystems in Moscow. "Sometimes communication can be difficult because of language problems and cultural differences." Moiseyev said that Sun Microsystems uses over 300 Russian specialists in Moscow, St. Petersburg and Novosibirsk. The company pins great hopes on Russian brainpower, he said. "Russia has always been on the top of technology progress. ... Almost all high-tech companies respect and appreciate the fruits of Russian education and the high abilities of Russian professionals." Past agreements with Western firms have not always been successful. A much-touted agreement between the Moscow division of British investment bank Fleming UCB in 1999 came to nothing, Babayan said, with a promise to invest $60 million in the Elbrus 2000 microprocessor falling through. In the past, Elbrus' partners have included Cisco Systems, Sun Microsystems, Transmeta, Avant! and Infineon Technologies.

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