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Korean firm signs MoU for semiconductor facility
Monday, 06 December 2004, 20:30 IST
HYDERABAD: South Korea-based Intellect Inc. Monday signed a memorandum of understanding (MoU) with the Andhra Pradesh government to set up a semiconductor manufacturing facility near this state capital.
The $600-million Silicon Wafer Fab facility would be the first of its kind in the country and would come up over 50 acres of land in Shamshabad near the hardware park and the proposed international airport.
The facility, which would manufacture eight-inch wafer fab (fabrication), would be ready for commissioning by the end of next year.
The fab facility would have a capacity of 30,000 wafers start per month.
"If all goes well we will start working on the second fab up in 2006 with an investment of $2 billion," said Intellect chairperson June Min, one of the four promoters of the facility. He said Intellect would make no initial investment in the facility.
The MoU was signed by Min and Karnataka's principal secretary, IT, J.C. Mohanty in the presence of Chief Minister Y.S. Rajasekhara Reddy.
Min said the facility would provide direct and indirect employment to 12,000 people.
"This is the best value added and high scale industry. After the second fab comes up here, the contribution to local economy will be worth $6 billion every year," he added.
Min, who has the experience of setting up eight fab facilities, would raise $160 million through equity. While $80 million would be raised in the country, another $80 million would come from abroad. The remaining $440 million would be borrowed from banks and financial institutions.
Min was confident of syndicating the finances in a month. He said he was holding talks with ICICI, State Bank of India, Reliance Infocom, Bank of America, industrial investors, investment bankers and IT venture capitalists.
The chief minister, popularly known as YSR, said the state government would bear the cost of interest servicing for 10 years.
"The government will pay 
350 million every year as the interest subsidy. This comes to 1.25 percent over the total borrowings. This does not include sales tax and other taxes," he said.
"This is a highly risky investment. The state government is acting as a facilitator. Being a professional I am sure Dr. Min can syndicate the finances," he said.
YSR said the central government had been asked for equity participation of $40 million in the project. "It is for the central government to take a decision," he added.
The state government has agreed to provide free land for the project and assured infrastructural support, including 10,000 kilolitres of water every day and 35 megawatts (MW) of power required for running the plant.
The semiconductor manufacturing facility would establish technology partners and captive customers by allocating up to 60 percent of the FAB capacity. Min said the captive customers would include LG and Samsung.
The proposal for setting up the unit was first mooted a few years ago when IT-savvy N. Chandrababu Naidu of the Telugu Desam Party (TDP) was chief minister.
The MoU is being seen as a major achievement of the Congress government, which assumed office in May this year after the defeat of the TDP. YSR has since tried to dispel apprehensions that his pro-farmer government would neglect the IT industry.
Source: IANS
350 million every year as the interest subsidy. This comes to 1.25 percent over the total borrowings. This does not include sales tax and other taxes," he said.
"This is a highly risky investment. The state government is acting as a facilitator. Being a professional I am sure Dr. Min can syndicate the finances," he said.
YSR said the central government had been asked for equity participation of $40 million in the project. "It is for the central government to take a decision," he added.
The state government has agreed to provide free land for the project and assured infrastructural support, including 10,000 kilolitres of water every day and 35 megawatts (MW) of power required for running the plant.
The semiconductor manufacturing facility would establish technology partners and captive customers by allocating up to 60 percent of the FAB capacity. Min said the captive customers would include LG and Samsung.
The proposal for setting up the unit was first mooted a few years ago when IT-savvy N. Chandrababu Naidu of the Telugu Desam Party (TDP) was chief minister.
The MoU is being seen as a major achievement of the Congress government, which assumed office in May this year after the defeat of the TDP. YSR has since tried to dispel apprehensions that his pro-farmer government would neglect the IT industry.
Source: IANS