Advanced Micro Devices (AMD) is warming to the idea of building a chip manufacturing plant in India, which would be a significant breakthrough for the country's high-tech ambitions.

Several of the world's top chip vendors, including AMD, Intel, and Texas Instruments, have set up chip design facilities in India. But the country does not yet have a state of the art chip manufacturing plant. Intel said earlier this year it had decided against setting up such a plant, because the Indian government was slow to articulate its policies for the semiconductor industry.

Hector Ruiz, AMD's chairman and CEO, was in India Thursday to announce the opening of a new, 52,000 square-foot AMD design facility in Bangalore that will house up to 350 engineers. The company has outgrown its previous design facility, which opened in 2004.

Ruiz said at the event that it is critical to have manufacturing operations in close proximity to research and development. "A fab in India is under consideration," he said.

AMD's chip production efforts in India have been limited so far to its involvement with SemIndia Inc., a consortium of investors that plans to set up a wafer fabrication, and assembly and test operation in India.

AMD said in 2005 that it would transfer some of its manufacturing process technologies to SemIndia, but that project has been delayed, in part because the Indian government was slow to announce its semiconductor policy and a package of incentives for the chip industry. Both were finally announced earlier this year.

The partnership with SemIndia will help AMD to test the waters in India and better understand its regulations and policies, Ruiz said. The company will continue to work with SemIndia before making a final decision as to whether to set up its own fab, he said.

Along with the design operations in Bangalore, AMD also has a design facility in neighboring Hyderabad, which became part of the company when it acquired ATI Technologies last year. AMD will continue to increase the number of design engineers it has in India, Ruiz said.