SemIndia's chip facility delayed by three years

SemIndia Inc, which plans to build a $3 billion semiconductor-manufacturing plant in India with Advanced Micro Devices Inc, said it would delay the start of production by three years to raise funds for its construction.

SemIndia will need as long as a year to find the money for the factory, which may cost more than $3 billion, BV Naidu, head of Indian operations, said in an interview in Bangalore today while attending a conference organised by the India Semiconductor Association.

"Due to the changing market scenario, we are in close contact with all our potential investors,'' Naidu said. He declined to elaborate. Sunnyvale, California-based Advanced Micro, which agreed to provide the chip-making technology, and Flextronics International had earlier said they may acquire stakes in SemIndia. The global chip industry may grow less than previously expected because of "uncertainty'' over the world economy, Taiwan Semiconductor Manufacturing Co Chief Executive Officer Rick Tsai said last month.

The Hsinchu, Taiwan-based company, the world's largest custom-chip maker, provides a gauge for the industry as its chips are used in a range of electronics products.

Companies that plan to set up chip-manufacturing plants and factories for making solar cells have agreed to invest $7 billion in India over 10 years, Jairam Ramesh, minister of state for commerce, said at the conference today. He didn't provide additional details. The country is trying to attract more investments in manufacturing to create jobs and spur economic growth.

SemIndia planned to start production this year in the manufacturing plant, which is to make chips using 65- and 90- nanometer technology, Chief Executive Officer Vinod Agarwal had said in April 2006. The plant was initially scheduled to be the nation's first chip-making facility.

A nanometer, which is one-billionth of a metre, measures the size of transistors in a chip. Smaller transistors cut costs and increase efficiency.

Infineon Technologies AG, Europe's second-biggest chipmaker, in March said it would license its technology to Hindustan Semiconductor Manufacturing Corp, which planned to invest as much as $4.5 billion in two manufacturing plants in India. Hindustan Semiconductor at the time said it planned to start production within two years.