Hyderabad gets Fab City

Putting all speculation to rest, SemIndia today announced Hyderabad as the location for setting up its Fab City project.

Addressing a joint press conference with Andhra Pradesh chief minister Y S Rajasekhara Reddy, company president and CEO Vinod K Agarwal said that the $1-billion phase-one of the project with assembly and testing facilities would be operationalised as early as in one year.

The Government of India is expected to announce a policy with regard to the support needed to the Fab City project offering tax incentives and other facilities on its part. The Centre would also take a decision on the $250-million equity investment by the government as sought by SemIndia, Agarwal said.

The second phase of the project with an investment of $2 billion will have the actual Fab facility, which will produce semiconductor chips. According to Agarwal, the second phase will require two years "� first year to build the physical infrastructure and the second year to install machinery "� before the commencement of chip manufacturing becomes a reality at the proposed Fab City.

Thanking Union IT minister Dayanidhi Maran for bringing the Fab City to India, and then supporting the efforts of the state to become a preferred choice for locating the project, the chief minister assured every possible support to the project.

The chief minister gave the credit to Maran for the early announcement on Fab City location, as the state government and the company had thought of waiting till the Centre took any decision in this regard.

"Now all those incentives and policy support expected from the Government of India are a mere formality," Reddy said.

A proposal to get the foundation stone for Fab City project laid by US President George W Bush is said to be one of the reasons for the early announcement of Fab City location.

The state government on its part is allocating 1,200 acres of land near the upcoming international airport besides other facilities.

"Though quite cost-intensive to undertake semiconductor operations, they are extremely beneficial to the state and the country in the long run," Reddy observed. The Fab City would give a boost to the hardware manufacturing sector in the country.

APInvest, promoted by the state government, has been acting as a nodal agency for the Fab City project.

As regards the project, US-based AMD is licensing its technology besides being one of its clients. Broadcom is another possible client for Fab City chips, according to Vinod Agarwal.

Agarwal said AMD was also expected to take part in the equity investment in the project. SemIndia was planning to mobilise 50 per cent investment from its partners and the remaining 50 per cent funds would be raised through debt finance, he added.

Besides the chip manufacturing facility, the Fab City will house over 200 suppliers required to make semiconductors. The project is expected to provide nearly 5,000 direct employment in each phase.