SemIndia, AP ink pact for Fab City project

By agencies   |   Friday, 17 February 2006, 08:00 Hrs
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HYDERABAD: SemIndia, a consortium working towards establishing a $3-billion semiconductor manufacturing base, and the Andhra Pradesh Government today entered into a memorandum of understanding (MoU) for an ambitious project that seeks to put India on the global semiconductor map.

Chairman of SemIndia, Dr Vinod K. Agarwal, said that a special purpose vehicle (SPV) would soon be created and the role of developer of the project would be transferred to it within 45 days.

In the first phase, the project will have two components - a $75-million test and assembly line that would be used by the company's technology partner, Advanced Micro Devices (AMD), and a fab.

The financial closure of the project would be based on the announcement of a semiconductor policy and also the Central Government equity contribution to the project.

The equity component would be about $1 billion, while the rest would be debt.

While the test and assembly unit could churn out some 25 million chips a year, the fab facility would handle about 2,40,000 wafers a year, with each wafer potentially holding hundreds of chips.

This capacity would be doubled in the second phase, when the total investment would be about $3 billion.

Explaining the economics of semiconductors, Dr Agarwal said: "Typically this industry thrives in a cluster environment. We expect several other chipmakers to set up facilities. What would begin with consumption within the country would be exported all over the world. This is backed by AMD, which has 23 percent share in the world; it has doubled its market share in five years. Soon we expect to announce other partners. AMD itself would be a major customer for this project."

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