SemIndia scouts new partner after AMD deal expires

One of India's chip manufacturing projects, SemIndia Fab, is reportedly seeking a new technology partner after its three-year deal with Advanced Micro Devices Inc. lapsed.

According to a report from the Financial Chronicle, "After its recent breakup with technology partner AMD, SemIndia is now scouting for a new partner." The report said SemIndia "is in preliminary discussions with chipmakers like [the] Israeli firm Tower Semiconductor, but says the process of finding a new partner to invest in India is tough because of the current economic conditions."

SemIndia signed a memorandum of understanding with AMD in December 2005 for manufacturing, technology licensing and business development to meet the growing Indian demand. There were rumors that AMD might also acquire equity in SemIndia, but the technology transfer agreement lapsed, according to the report, as AMD battles financial problems and is shifting to a fab-lite strategy.

AMD India declined to comment on the report, and a company spokesperson referred questions to AMD's corporate offices in California. AMD has four R&D centers in India based in Bengaluru and Hyderabad.

In an interview, B.V. Naidu, managing director, SemIndia Fab in Hyderabad, told EE Times, "There has been no breakup or anything of the sort with AMD," but declined to elaborate. Naidu also declined to comment on reported talks between SemIndia and Tower Semiconductor.

"We are talking to a few potential partners regarding the fab facility for both a strategic and a financial partnership," Naidu said. "The response for strategic partnerships are encouraging, but it is not so in the case of a financial partner. Still, we hope to have an arrangement in both these regards soon."

The Financial Chronicle report also quoted Bob Kondamoori, managing director of Sandalwood Partners, one of the main investors in SemIndia, as saying it is looking for a new partner. "Many of the companies are currently in a wait-and-watch mode because of the economic situation and downturn in semiconductor industry. Many of them are themselves looking to sell their fabs," the report quoted Kondamoori as saying.

According to the report, delays in announcing details of India's semiconductor policy and the lack of indigenous companies have fueled doubts among chipmakers about the viability of manufacturing in the country. Hindustan Semiconductor Manufacturing Co. (HSMC), which like SemIndia had announced plans to begin IC manufacturing in India, previously announced a technology partnership with Infineon Technologies, but those talks have stalled.

Thus far, neither SemIndia nor HSMC have applied for subsidies under the government chip policy announced last year to promote local IC and electronics manufacturing.

The only serious proposal to the government for chip manufacturing here came from Reliance Industries, one of India's largest industrial groups. It intends to set up a semiconductor wafer fab with a total investment of $4.6 billion over 10 years. The fab is expected to employ about 4,000 workers. The location will depend on the incentives offered by regional governments.

The Reliance proposal also seeks federal subsidies totaling more than $800 million.

- K.C. Krishnadas
EE Times