SemIndia, Andhra to form SPV for Fab City

Company signs MoU with state government

SemIndia CEO Vinod K Agarwal today said that his company and the Andhra Pradesh government would soon set up a special purpose vehicle (SPV) for the proposed Fab City project. SemIndia would rope in other players in due course.

He signed here on Thursday a formal MoU with the state government on land allotment and other packages of incentives for the $3-billion project proposed to be set up in Hyderabad.

Speaking to the media on the occasion, Agarwal said that the financial closure for the phase-I project, which includes assembly and testing facilities, is already in place.

"As far as the second phase, which comprises the actual fab facility, is concerned, we are awaiting the decision of the Government of India on the proposed investment on its part in the project as well as the policy issues with regard to fab industry," he said in reply to a question. He, however, refused to divulge the details of the MoU on power tariff and other things.

Of the $3 billion investment projected for the Fab City, equity component would be about $1 billion, he said. The preliminary exercise, including the formation of SPV, land transfer and necessary clearances, would take about 45 days before the actual work begins, he said. The company would start selecting developers as soon as the finalisation of layout for the proposed site is ready.

According to him, phase-I is expected to produce 25 million chips a year and the fab unit is expected to produce 240,000 wafers a year initially. The Fab City is expected to house anywhere between 4 and 8 fab units depending upon the nature of the product.

Complimenting the state government for moving quite fast in making things happen, Agarwal said it was an all-new experience for a person like him who went abroad 30 years ago.

Chief minister Y S Rajasekhara Reddy said the natural advantages of the state, apart from the support of the Government of India and the Union IT minister had made the Fab City project dream come true.

"In fact, we have got not just one, but three international airports to our advantage, one at Chennai and another at Bangalore, which are nearer to Andhra border than to their respective cities," he said in a lighter vein, and added that the border districts of Nellore, Chittoor and Anantapur are going to witness huge development on account of these international airport facilities in both the neighbouring states.

According to SemIndia chief, a meeting between AMD, the technology partner for the Fab City, and the chief minister is expected to be followed during the next few weeks.