Friday, April 07, 2006

Downstream from 'Fab envy'

A few weeks ago, I had written about SemIndia saying that while it would be great if semiconductor vendors chose India on merits, there was no role for the State to get involved in these choices. On a related note, Shobhana Subramanian had an article in Business Standard about the land acquisitions by India, Inc. These concerns may have been on the right track. Today, one of my readers pointed me to an article in The Times of India's Hyderabad edition (4 April 2006). I normally like to link to sources but the TOI website is so bad I will spare you the pain of going there:

HYDERABAD: You can call it the politics of Fab. With eight semiconductor companies now willing to set up units in Hyderabad, it would have been fair to assume that the city has a problem of plenty. But that's not the case.

As the state government has decided to anchor the Fab City project around SemIndia promoted by Vinod Agarwal, other semiconductor units want to keep away from the project.

Moreover, SemIndia is using technology provided by AMD and therefore the Intel partnered Non Tech Silicon India (NTSI) project --- to be announced later this week --- does not want the fulcrum of the Fab park around SemIndia.

Faced with this reality, the Andhra Pradesh government is now trying to reconfigure its Fab City project and delink the SemIndia project from the Fab City proposal. This is not as easy as it seems, because the state government has already signed an MoU with SemIndia. In the meanwhile, faced with numerous complaints about SemIndia and apprehensions about the ability of its promoter Vinod Agarwal to implement the project, the government has asked the promoter to furnish a copy of the MoU he has with AMD.

"We are yet to hear from him," an official said. When asked how the state government chose to devolve such a huge project around Agarwal without checking his antecedents, the official said that the project came to the state government via the Union government and thus it was assumed that New Delhi had done all the preliminary checks.

With the entire Fab City project going into the hands of SemIndia, which has AMD as its partner, NTSI is facing problems in closing its deal with Intel which has its reservations on locating its facility on a campus controlled by its competitor AMD.

Conceding that due diligence was not given before signing an MoU with SemIndia, they claimed private investigators had been used to check the credentials of Dr June Min-led NTSI before land was given to him.

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