The Hindu : Front Page : Rs. 13,500-crore chip facility for Hyderabad

Online edition of India's National Newspaper
Friday, Feb 10, 2006

Front Page

Front Page

Rs. 13,500-crore chip facility for Hyderabad

Special Correspondent

`Biggest single investment in semi-conductor sector'

HYDERABAD: A US $ 3 billion(Rs. 13,500 crores)facility for the manufacture of semiconductors used in personal computers, television sets, mobile phones and other digital devices will be set up by SemIndia Inc. near the Hyderabad international airport.

In what the promoters describe as the "biggest single investment for decades to come" in the hardware sector, the project is designed to capture a good chunk of the semiconductor industry whose turnover is expected to touch $ 33.6 billions by 2015. This optimism is based on the projection that the use of electronic goods, which use semiconductors, is likely to touch the $ 100- billion mark by that year going by the current annual growth rate of 24 per cent.

This announcement was made at a press conference addressed jointly by Chief Minister Y. S. Rajasekhara Reddy and President & CEO of SemIndia Vinod K. Agarwal. Appreciating the "tremendous efforts" made by Union Minister for Information Technology Dayanidhi Maran, the Chief Minister said it was due to his persuasion with investors in the US that such a huge investment had come to India.

With this announcement, Hyderabad has pipped two other Southern cities -- Chennai and Bangalore -- in the race to attract this Fab facility. Chennai lost out because the Tamil Nadu Government did not show "sufficient interest" and the project was clinched in favour of Hyderabad due to "Dr. Rajasekhara Reddy's keen interest and guidance," the upcoming airport and the availability of uninterrupted water supply and power, Mr. Agarwal said.

Job opportunity

SemIndia plans to invest $ 1 billion in phase I of the project within a year on the assembly and testing facility. The actual Fab facility for manufacture of wafers (chips or microprocessors) of different sizes will be completed in another two years after an additional investment of $ 2 billions.

Advanced Micro Devices of the US, the second largest micro-processor manufacturer with a 23 per cent market share, will transfer technology for making the chip component which is often 1/100th the size of human hair. AMD is investing in the project but Mr. Agarwal said he would disclose the details later.

The ground-breaking ceremony for the Fab City is slated for next month. About 7,000-10,00 skilled and semi-skilled persons are likely to gain direct employment in the Fab City and at least ten times that number in about 200 downstream industries.

Offering to disclose the finer details of the funding later, Mr. Agarwal broadly said strategic partners and equity would account for half the proposed investment while the rest would come through debt financing. The Government of India is expected to invest $ 250 millions in the project and an announcement is likely when the national policy framework on the sector is finalised.

Land to be allotted

On its part, the Andhra Pradesh Government has offered to allot 1200 acres for SemIndia's Fab facility besides 50 million gallons of water a day, a dedicated 600 MW power project for the mega Fab-City and supply of electricity at the rate of Rs. 2.25 a unit. APInvest chief C. S. Rao said another Fab unit promoted by Dr. June Min of South Korea had got delayed over issues of infrastructure.

The Chief Minister said the State had made large strides in software by registering a 65 per cent growth rate last year and in business process outsourcing. But, the growth of the hardware sector in the country as a whole was sluggish in spite of its high employment potential. He assured full Government support for the proposed Fab facility.

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