Intel may ink pact with Nano-Tech Silicon for fab facility at Hyd

Global semiconductor major Intel Corporation is expected to sign a pact with June Min-promoted Nano-Tech Silicon India (NTSI) Limited this month for setting up a $600-million fab facility at Hyderabad. Besides being a technology partner, the company is also expected to take a stake in the project.

According to sources, NTSI is all set to conclude the much-awaited agreement with the equity partners, including Intel and the Andhra Pradesh government, just ahead of the ground-breaking ceremony for the proposed $3-billion Fab City project in the first week of March.

Sources close to the development said an Indian consumer electronics company had offered to take a major equity stake in the project even though the promoters expressed their inability to meet its expectations on account of prior commitments given to other players. According to reliable information, NTSI is offering about $82 million equity stake to this company.

Besides the consumer electronics major, Hyderabad-based Vijay Electricals, founded by Dasari Jairamesh, would chip in $42 million in the form of equity, sources told Business Standard. As per the preliminary understanding, UTI, Andhra Pradesh government and Intel may take an equal stake of $32 million each, they said.

Though the company had originally put the total equity size at $160 million, the financial structure is expected to undergo changes following the latest developments.

Though June Min reached an understanding with IBM on technology support for the project earlier last year, he subsequently opened a second front to rope in Intel as his preferred choice in place of the former. Intel's senior officials, who visited Hyderabad last month, had held discussions both with Min and senior officials of the state government on the proposal to join the project. Earlier, NTSI approached the Tata group requesting them to invest in the project but its head sought several clarifications before taking a decision in this regard, sources added.

During the ground-breaking ceremony held for the proposed Fab project on June 26, 2005, June Min said that technology partners might also offer product buyback options to the company.

The technology package will include advanced 250 and 180 nano meter (nm) process technology, intellectual properties and technical services, according to NTSI. The company expects to receive the technology transfer package, which will also include a commitment for 130 nm technology transfer within 12 months.

Earlier in December 2004, June Min signed a memorandum of understanding with the state government to form a joint venture company for setting up a semiconductor Fab manufacturing facility in Hyderabad.

Subsequently, he incorporated NTSI, to produce a range of products including wireless communication chips, PC chips, digital consumer electronic chips, automobile ICs and memories.

The company is proposing to develop a logic semiconductor fab, which will have a capacity of 30,000 wafer start per month and will start with 0.35µm (sub micron) 3 and/or 4 metal layers 10,000 wafer start per month and then will be extended to 0.25µm (sub micron) 5 metal layers 20,000 wafer start per month.