By Sheena Lee

TAIPEI (Reuters) - Intel Corp said on Monday it will invest $500 million in Taiwan over the next five years, with a large amount of the investment targeted at the island's WiMax sector.


The chip giant said there are still technical challenges that need to be solved for the new super-high-speed wireless standard, but that the firm has been encouraged by the development of WiMax in the last two years.

"This investment is largely for WiMax," Lil Mohan, managing director of Intel's WiMax program, told reporters on the sidelines of a news conference.

Mohan added that Intel expects WiMax to be commercially deployed in the second or third quarter this year in the United States, and that infrastructure in Asia should be ready by 2009-2010.

Late last year, Taiwan's government said it planned to spend $664 million in the next few years on the WiMax technology -- seen as the more advanced standard to WiFi, which only works near a transmitter.

WiMax allows anyone with a WiMax enabled laptop or media device to download songs, movies and business presentations over distances of up to 30 miles.

"Japan will probably launch the first (WiMax standard in Asia), since they have already invested lots of money," said Mohan. Taiwan and India could follow suit, he said.

Acer Inc , the world's third-largest laptop vendor, said on Monday that it is planning to launch laptops with WiMax capabilities in June or July this year.

Acer said it will ship a significant amount of notebook PCs with WiMax capabilities, but declined to give shipment forecast.

"WiMax is a good solution for broadband and it is an affordable answer in terms of price and mobility. It's going to be huge in the coming several years," Acer Chairman J.T. Wang told reporters at the same news conference.

"This is also a great opportunity to boost the information technology industry in Taiwan," added Wang.

Starting from a small base, WiMax is expected to grow much faster than the broader networking industry, with spending forecast to rise at a compounded annual rate of about 150 percent between 2006 and 2008, according to MIC, a top Taiwan think-tank.

Wireless and WiMax technology product makers in Taiwan include D-Link , ZyXEL and Gemtek Technology .

Other countries in various stages of WiMax network development include South Korea, Vietnam, Thailand, Singapore and Australia.

(US$1=T$30.3)

(Editing by Ken Wills)
© Copyright 2007 Reuters.