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Intel to be part of H'bad's Fab project

If all goes well, Fab City will host both the US-based rivals AMD and Intel, in chip manufacturing.
None | By Indo-Asian News Service, Hyderabad
UPDATED ON APR 01, 2006 12:10 PM IST

In more good news for Hyderabad, the world's largest chip manufacturing giant Intel has reportedly decided to become a technology and financial partner in the mega semiconductor fabrication (Fab) unit in Hyderabad.

Intel will join hands with NanoTech Silicon India Pvt Ltd (NTSI), which is setting up a Fab unit near the upcoming international airport at Shamsabad, about 20 km from Hyderabad.

It came a month after SemIndia, a consortium of overseas Indians, signed a memorandum of understanding with the state government for setting up the $3 billion Fab City, the country's first mega semiconductor chip making facility.

NTSI's Fab facility is expected to be a part of Fab City, for which US-based Advanced Micro Devices (AMD), the world's second largest chip manufacturer, has a tie-up with SemIndia.

If all goes well, Fab City will host both the US-based rivals in chip manufacturing.

In NTSI's $600 million facility, Intel is expected to hold an equity stake of $32 million and also become a technology partner for the facility. The Andhra Pradesh government is expected to hold equity of $24 million and provide infrastructure and tax exemptions.

A deal in this regard is expected to be signed next week. Indications to this effect were received after Arvind Sodhani, Intel Corporation senior vice-president and Intel Capital president, and the promoters of NTSI had a meeting with Chief Minister YS Rajasekhara Reddy on Wednesday.

The facility will develop low cost chipset solutions with system manufacturing partners for colour televisions, DVDs, LCD driver modules, telephone handsets, cellphone chipsets, computer chipsets and automotive IC's.

NTSI, promoted by June Min, chairman and chief executive officer of Seoul-based Intellect, Inc, plans to manufacture eight-inch fabs in the first phase.

He also plans to have the second Fab unit at a cost of $2.5 to 3 billion to manufacture 12-inch fabs.

The MoU for the project was signed on Dec 6, 2004, while the foundation stone for the project was laid on June 26 last year.

The state government had allotted 50 acres of land for the Fab unit.

Min had announced that the project would have a capacity of making 30,000 chips a month.

He had also announced that technology partners would be finalised in 60 days and they would invest up to 20 per cent of the total equity of $160 million. However, the process was delayed, raising doubts about the future of the project.

Min is also holding talks with Videocon, one of the leading players in electronic consumer durables in India, which is said to be keen on holding a major equity stake in the project.

Last month, the Andhra Pradesh government and SemIndia, a consortium of overseas Indians, signed a memorandum of understanding for setting up the $3 billion Fab City.

The state government announced that it would allocate 1,200 acres for Fab City at Tukkuguda near the upcoming airport. It was also announced that NTSI's Fab unit would be a part of the Fab City.

Though SemIndia CEO Vinod Agarwal had said that the actual work on the project would begin in 30 to 45 days, this process has also been delayed as the promoters are still waiting for a policy to be announced by the Indian government.

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