Flextronics to invest in SemIndia project
By agencies   |   Wednesday, 05 April 2006, 19:30 IST
Printer Print Email Email
NEW DELHI: Betting big on India's semiconductor potential, Flextronics announced it would pick up minority stake in SemIndia, which is embarking on an ambitious $3-billion chip manufacturing project in Hyderabad. The Singapore-based company’s President and Managing Director (Asia), Peter Tan said, “Under the strategic partnership, Flextronics will manufacture electronic products for SemIndia, and SemIndia would make semiconductor chips for the various product categories that Flextronics manufactures in India. These include chips for cell phones, set-top boxes and personal computers.” Tan said that the investment in the SemIndia project reflected the potential that the company saw in the electronics-manufacturing sector in India. He, however, declined to divulge the quantum of equity that the company would pick up in the project or the investment it would infuse. Commenting on the strategic partnership, Vinod Agarwal, Chairman of the Board and CEO, SemIndia Inc, said that in addition to chip manufacturing, the consortium also intended to get involved in market-making activities for its customers. “For those products where we create market for our customers, Flextronics will be our preferred supplier,” he pointed out. The $3-billion project has a 2:1 debt equity ratio where $1 billion would be raised as equity, and the balance through debt finance, vendor finance and project finance. Agarwal said, “We expect $250 million from the Central Government as equity, another $250 million from strategic partners such as Flextronics, and the balance $500 million would come in as private equity.” Besides, the project will also have some equity by Andhra Pradesh Government, he said, adding that the State Government would not have any direct investments in the project, but instead offer incentives in terms of land, infrastructure and tax concessions.

siliconindia