WITH the government having finally cleared a package of concessions for the semi-conductor industry, a group of Silicon Valley NRIs are planning to set up a joint venture in India to invest $4.5 billion in semiconductor manufacturing.

The group will float a SPV under the name of Hindustan Semiconductor Manufacturing Corporation (HSMC) India and tie up with a global major, one of the top five multinationals in this segment, to set up two fab units. Samsung, Freescale Motorola, Intel, Infenion, ST Microelectronics and Toshiba are among the global leaders shortlisted for the JV which is likely to be announced within three weeks.

This will be the second major investment flowing into the semiconductor sector, after SemIndia’s $3-billion investment plan. SemIndia is in the process of developing its ‘assembly, test, mark and pack’ (ATMP) facility in Hyderabad, to manufacture its first chip by 2008. It has signed a MoU with AMD for transfer of technology, besides a pact with Flextronics for equity participation in its proposed fabrication facility.

The location for the two semiconductor fab units that HSMC group plans to set up is yet to be decided. The group is, however, in talks with the state governments’ of Karnataka, Andhra Pradesh and Tamil Nadu.