The Karnataka government, on 8 December 2005, gave necessary clearances for the proposed Fab City project entailing an investment of Rs.15,000 crore.

The state cabinet approved the proposal by Sem India, an NRI firm, for establishing the unit probably on Bangalore-Mysore sector by providing required infrastructure facilities like 1,500 acres of land, uninterrupted power supply and 10 million gallons of water per day to the proposed project.

The Fab City will provide employment to 20,000 persons, will also produce silicon wafers, having a testing, assembly and packaging unit, IC design houses, TFT panel fabs, solar cell fabs, R&D facilities. It will also house a university and technical institutions for training the manpower for the development of semi-conductor.

The centre has selected Bangalore, Chennai and Hyderabad as ideal locations for setting up the Fab City.