The Hindu Business Line : Govt may pick up equity stake in SemIndia-AMD unit

THE Communications and IT Minister, Mr Dayanidhi Maran, said he would approach the Finance Ministry for approval to pick up equity in the semiconductor manufacturing facility being set up by SemIndia along with Advanced Micro Devices Inc (AMD), after the details of the project are chalked out.

The details include the funding and the location of the plant.

The unit will make chips with a circuitry width of 65 to 90 nanometres and mark India's movement from chip designing to chip manufacturing.

SemIndia did not spell out the exact details on financing, location or when the project will commence. Mr Vinod Agarwal, Chief Executive Officer, SemIndia, however, said the plant would be funded through a mix of options, including venture capital, debt financing and strategic partnership and investments from the IT department and the State Government. "Generally, a plant of this size would be operational in two to three years," Mr Agarwal said.

The domestic market for semi-conductor chips is estimated to be $800 million by the end of the year. By 2015, it is estimated to touch $30 billion each year. At present, China and Taiwan are the major centres in the global chip manufacturing market, which is pegged at $220 billion.

This move comes even as Mr Craig Barret, Chairman of Intel Corp, is expected to visit India next week. In June, Mr Maran had announced that Intel was planning to invest $400 million to assemble and test chips in India. It was reported that Intel had dropped its plans because the Government was not giving tax incentives. The SemIndia-AMD plant may be given tax incentives after consulting the Finance Ministry, Mr Maran said. Mr Barrett is scheduled to meet the media on Monday.

Mr Hector Ruiz, Chief Executive Officer, AMD Inc, said that the idea of the partnership with SemIndia was to bring down chips price, which will make computing cheaper for Indian consumers. Through its agreement with SemIndia, AMD will cover manufacturing, technology licensing and business development. While AMD has 10 per cent of the Indian market, Intel controls the rest. Less than two per cent of people in India own desktop computers. Indian PC manufacturers such as HCL Infosystems Inc and Xenitis Infotech Pvt use AMD microprocessors to sell computers at less than Rs 10,000, to make them more affordable to customers.

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