SemIndia MD quits; firm assures on packing unit

State to review land for $3 billion chip project in March.

BANGALORE: There is a change of guard at SemIndia Group, which has been trying to set up a full-fledged semiconductor chip unit in India at a cost of $3 billion for close to three years now.

B V Naidu, managing director of two of the group’s units SemIndia Systems Pvt Ltd
and SemIndia Fab Pvt Ltd, has put in his papers to move on to another company putting into question the project’s timely execution.

This is the second high profile exit after former AMD India managing director Ajay Marathe, who had joined SemIndia as chief operating officer, quit to join Reliance Semiconductor several months back.

The move also comes at a time when the group had sought time from the AP government to achieve financial closure while the outgoing MD has been on the record stating the chip unit would be delayed by at least three years given the global semiconductor industry climate.

In response to a query from DNA Money, SemIndia put out a release stating current vice-chairman of the group Bob Kondamoori will take over as the MD of SemIndia Systems, while Neeraj Saxena, who has been with the group since May 2007 will take over as the MD of SemIndia Fab.

Kondamoori is also the managing director of the $120 million early stage venture capital firm Sandalwood Partners which has invested in SemIndia.

“I will continue to be associated with SemIndia,” said Naidu, a former director of STPI Bangalore and Hyderabad and responsible for much of the IT development in both the cities over several years. He however refused to divulge where he was going.

B V Naidu, will continue on the Board of both the companies and will provide support and guidance in various areas, Vinod Agarwal, group chairman said in the statement.
SemIndia which was initially the core promoter of the ambitious and much hyped FabCity project in Hyderabad along with the Andhra Pradesh Investment Corporation (APIIC), was to be its anchor client.

Apart from the chip assembly, test, marking and packaging (ATMP) unit that was initially estimated to cost approximately $100 million, SemIndia was also to set up a $3 billion chip fabrication unit.

However, it was not able to achieve financial closure for the fab after technology partner AMD reportedly exited from the project while potential overseas investors were said to be questioning the logic of investing in a chip fab in India given the overall semiconductor scenario.

When asked the status on the financial closure, SemIndia Chairman Vinod Agarwal said, “We have committed to ATMP as phase 1 and we are working full speed on it. As a private company, we are not required to disclose or comment on company’s financials.”

On the exit of Naidu and appointment of two MDs he said, “Since the pace of our operations has also grown commensurately, it is the right time for the two entities to get independent business heads and, resultantly, more focus as well. B V  Naidu will support the new leadership in his capacity as a board member,” Agarwal added.

According to a senior AP government official the top brass of SemIndia, which met up with APIIC and other departments on Thursday, has promised to complete the ATMP construction by February and commercial operations by March.

The company has been allotted about 100 acres in the 1,050 acre Fab City to set up the fab including a 25 acre ATMP.

According to the official the state had issued a notice to SemIndia in August to expedite the project subsequent to which it had asked for three weeks time to achieve financial closure.

While doubts still persist on the chip fab at the FabCity, interestingly enough it has turned out to be a favourite destination for solar photovoltaic fabrication units with at lest 13 of them find place in the complex cornering over 800 acres.

“We have no land left in FabCity for more units,” an APIIC official said adding the government would take a call on the SemIndia land in March after a review of the situation.