'Fab'ulous dreams lie shattered

DESARAJU SURYA
Hyderabad: Andhra Pradesh’s dream of emerging as the largest cluster of semiconductor manufacturing units suffered yet another jolt with the promoters of the Rs 2500 crore semiconductor fab unit backing out of the project. The promoters – Nano-Tech Silicon India Private Limited – have merged their company with TF Solar Power Private Limited to develop a thin film solar cell fab project instead of the semiconductor fab unit. Of course, both the companies are promoted by June Min and he informed the AP Industrial Infrastructure Corporation, the nodal agency for implementing the Fab City project, that efforts to set up the semiconductor fab unit in India “have not materialized” and hence the merger. Left with no other option, the Andhra Pradesh government has approved the merger and issued an order allotting 50 acres of land at the so-called Fab City to the new entity. The land, which was earlier allotted free-of-cost, has now been leased at a premium of Rs 10 lakh per acre and a two per cent lease rental for 33 years. The concessions extended to Nano-Tech Silicon India for setting up the semiconductor fab unit have also been revoked since the project has not been taken up. The Andhra Pradesh government conceived the Fab City project as the largest cluster of semi-conductor manufacturing units in the country. SemIndia group, which has been allotted 100 acres at the Fab City was the first one to back out, citing “worldwide downturn in semi-conductor manufacturing.” Now, some companies have come forward to set up photovoltaic or solar cell units that are smaller in size. Companies like XL Telecom and Energy, KSK Surya Photovoltaic Ventures, Solar Semiconductor and Surana Ventures Ltd. are setting up these units while some other companies are also ready to step in. “The long gestation period, coupled with high costs of establishment, has been keeping promoters away from the semiconductor units given the current financial slowdown across the world. While an investment of about 2 to 3 billion USD is required for a semiconductor manufacturing unit, a small investment of Rs 200 crore to Rs 300 crore is sufficient for setting up solar cell units,” officials pointed out. This is, however, not a comforting factor for the Y S Rajasekhara Reddy government which promised creation of lakhs of jobs through major projects like the Fab City. With major companies backing out of big ticket projects, the job potential in the state is drastically reduced.