Friday, January 03, 2014: India seems to have failed in attracting global chipmakers including Intel and Samsung for setting up a semiconductor wafer fabrication unit in the country. The government has now decided to go ahead with the two consortia, IBM and ST Microelectronics, it had approved in-principle. The Indian government will also share 40 per cent of total cost incurred in setting up of these fabs.
According to an ET report, a senior industry executive said, “The (two) consortia are very bullish.” The two players have already accepted the terms of support outlined by the government and they will now be preparing detailed project reports. The making of these reports could take as much as six months to be ready for submission.
Setting up a semiconductor wafer fabrication unit typically requires an investment of around $4-5 billion (Rs 24,800-31,000 crore). The industry executive shared, “The idea was, with the incentives firmed up, could we push the fence-sitters off the fence, but that didn’t happen.”
The deadline for submitting initial plans under a separate call for expressions ended in November, but the government failed to receive any new viable plans other than the two government had already approved in-principle.
These fabs are a major step in the direction of developing an electronics manufacturing ecosystem in the country. This will prevent loss of billions of dollars of foreign exchange spend on imports of electronics every year. It is worth mentioning here that electronic imports are expected to surpass oil imports by 2020. This projection was made in a report commissioned by the industry lobby India Electronics and Semiconductor Association last year.
The ET report quoted a department official on the conditions of anonymity saying, “We received many rejections and only a couple of expressions-of-interest. We would go ahead with the two fabs which have got in-principle approvals.”
The industry executive added to it saying, “There have been ongoing dialogues with these firms, but Taiwan Semiconductor Manufacturing Company (TSMC), for instance, said they just don’t have the bandwidth for a new greenfield project.”
Dr Ajay Kumar, joint secretary, Department of Electronics and Information Technology, said that the two fabrication units that have got in-principle approval from the government will be ready to produce chips on the next two-three years.
It is worth mentioning here that the government had approved in principle two consortia in September. One group consists of Jaiprakash Associates, IBM and Tower Jazz of Israel and another comprises of ST Microelectronics, Hindustan Semiconductor Manufacturing Corporation and Silterra of Malaysia.
