SemIndia to invest US$3bln in Indian chip facility

NEW DELHI (Reuters) - SemIndia plans to invest US$3 billion in a semiconductor chip-making factory in India, with technology from America's Advanced Micro Devices Inc (AMD), officials from the companies said on Wednesday.

AMD will transfer micro processor and logic manufacturing technology to SemIndia, and may pick up a stake in the proposed plant, Hector Ruiz, chief executive officer of AMD Inc, told reporters at a newsconference.

SemIndia, a consortium of overseas Indians, sees Indian demand for semiconductor chips at US$30 billion each year by 2015, its chief executive officer Vinod Agarwal said.

"We plan to create customised products for the Indian markets," he said. "The idea is to bring down the (chips) price so that everyone in India can use computing."

The plant will be funded through a mix of options, including venture capital, debt financing and government incentives, he said.

Work on the plant will begin sometime next year and the plant will be operational in two to three years' time, Agarwal said. The plant, whose location is yet to be determined, will make chips with a circuitry width of 65 and 90 nanometres.

India's ambitions to move beyond software into chips, used in everything from credit cards to mobile phones, has been thwarted by poor infrastructure such as bad roads and inadequate supplies of water and power.

But new firms are emerging, specialising in chip design, testing and packaging. India's growing market for mobile phones, cable TV boxes and computers will also help, as local chip makers will be better placed to service the market.

The domestic market for chips is estimated at US$800 million by the end of the year, and industry officials have said India has a chance of competing with heavyweights China and Taiwan to garner a share of the global US$220 billion chip pie.

India has at least seven proposals for "fab"s, or fabrication plants, an industry official said recently.

India's information technology minister said in June top chip maker Intel would invest US$400 million to assemble and test chips in India, but Intel did not confirm this.