Govt may take 26% in AMD unit

Centre to invest $234 million in chip project.

In a special case, the government is likely to provide $234 million (over Rs 1,050 crore) equity support to the $3 billion (Rs 13,800 crore) Advanced Micro Devices-SemIndia fabrication project.

AMD and SemIndia had signed a memorandum of understanding on Wednesday to set up the facility in the presence of Communications and IT Minister Dayanidhi Maran and AMD CEO Hector Ruiz.

The $34 million investment will fetch the government a 26 per cent stake in the venture, while SemIndia, a consortium of non-resident Indians, will be the majority shareholder. AMD will be a minority shareholder and the technology partner for the project, a senior company executive said.

The company will have an equity capital of $900 million (around Rs 4,100 crore), and the rest will be raised as debt from venture capitalists and financial institutions, senior government officials said.

The government had, a few months ago, refused financial support to some other fabrication units which had proposed to set shop in the country. A recent proposal for a support of $100 million to Intel, the world's largest chipmaker, had also been turned down.

In response to a question in Rajya Sabha today, Minister of State for Communications and IT Shakeel Ahmed disclosed that a request from the Andhra Pradesh government for subscribing to equity of a mega semiconductor fabrication facility in the state too had been turned down.

"The department of information technology has received similar requests for setting up semi-conductor fabrication units in India. They have been informed that at present the government of India does not have a policy to provide equity financing," he said.

The last time the government had planned to provide equity support to a telecom project was in 2000, when it decided to pick up a 45 per cent stake in the Rs 2,550-crore Sankhya Vahini project, a high-speed data network. IUNet was to hold 49 per cent in the joint venture. The project, however, did not materialise.

On Wednesday, AMD and SemIndia signed an memorandum of understanding for setting up the fab facility. There is also a proposal to set up a fab city, housing many supporting units.

Officials said Tamil Nadu was the likely investment destination.