October 23, 2007 / 2:43 AM / in 11 years

SemIndia to apply for incentives for new chip unit

NEW DELHI, Oct 10 (Reuters) - Indian semiconductor consortium SemIndia will apply within a month for government incentives to set up a chip-making facility in India, its chief executive said on Wednesday.

SemIndia, a technology partner of chipmaker Advanced Micro Devices Inc AMD.N, has said it plans to invest $3 billion over the next five years in a special economic zone (SEZ) in the southern Indian city of Hyderabad. India offers semiconductor units built in SEZs enticements in the form of tax breaks equal to 20 percent of capital expenditure during the first 10 years of a project. “We are in the process of applying for incentives,” Vinod Agarwal told reporters, adding the application would go to the government within a month.

A third of the investment would be in the form of equity and the rest would be raised as debt, Agarwal said, but he declined to name equity partners for the venture.

Agarwal, who founded semiconductor testing company LogicVision Inc LGVN.O in 1992, did not say when he expected the facility to come up.

SemIndia is building an assembly and test facility for chips in the same Hyderabad SEZ, which it expects to complete in the middle of next year.

“Operations should begin by the end of next year,” Agarwal said.

In March, Hindustan Semiconductor Manufacturing Corp said it would invest up to $4.5 billion to set up two chip-making units using technology from German chipmaker Infineon (IFXGn.DE).

Intel Corp (INTC.O), the world’s largest chipmaker, had initially shown interest in making chips in India, but later committed elsewhere due to delays in India framing guidelines.

Electronic sales in India are projected to touch $340 billion by 2015, according to the India Semiconductor Association and consultancy Frost & Sullivan, a figure cited to argue for manufacturing in India.

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