Officials say the vehicles are being acquired from excess inventory of U.S. stockpiles but will be upgraded before they are put into service. The cost of the AAV7 acquisition was not mentioned.
The upgrade is likely to be carried out by BAE Systems' Global Combat Systems unit, Defense Market Intelligence and Chile's Defense and Military blog reported. Independent comment on the acquisition and upgrade was not immediately available.
The first of the AAV7s is set to be delivered in 2014 after the upgrade, likely to involve installation of more powerful engines. Chile's purchase includes 10 AAVP7 A1 troop transports, one AAVC7 command vehicle and one AAVR7 recovery vehicle, the reports said.
Manufactured by U.S. Combat Systems, the AAV-7A1 is the current amphibious troop transport of the U.S. Marine Corps.
The vehicles, once commissioned, will be part of a 1,400-strong brigade Chile operates aboard its Sargento Aldea multirole assault ship, acquired from France in a $80 million deal. The Sargento Aldea previously operated in the French navy as the Foudre and served allied forces in NATO Yugoslavia operations in 1992-93 and French military action in Ivory Coast.
Analysts said the tracked AAV7 could work well with the Sargento Aldea and other Chilean navy vessels but might not be suitable for peacekeeping missions requiring faster, wheeled vehicles.
It was not immediately clear if the BAE upgrade would extend to weaponry.
A standard AAV7 is usually equipped with a .50-caliber machine gun and a 40mm grenade launcher.
Chile is also looking into acquiring new helicopters, landing craft and other hardware for its armed forces.
The Chilean military, recently spotlighted for its alleged failure to spend enough of its allocations channeled through the copper export tax and other financial instruments, is aiming to catch up with military advances made by South American neighbors Brazil and Argentina.
However, the military is also hamstrung by low response to its recruitment drive. Chile's economic growth has opened new career opportunities and turned the military into an employer of last resort.
The armed forces enlistment numbers are set to be the lowest this year since 2007, the Santiago Times reported.
The number of Chileans volunteering to join the military is down 21 percent from 2012 and is the lowest since the rules on military service were reformed in 2007, the newspaper said on its website.
"The explanation for the decrease is similar to previous years, as we have been a country with full employment and a wide range of educational opportunities," Armed Forces Undersecretary Alfonso Vargas told La Tercera newspaper. "There has been a strong competition that has changed the landscape."
Chile's economy has continued to grow by more than 5 percent each year since 2009 and the average unemployment rate is 6.4 percent, the Santiago Times said, citing 2012 data.
The military announced new incentives including higher pay, bonuses and scholarships as part of the effort to reverse falling recruitment.
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