A potential $3-billion factory to manufacture chipsets seems to be taking concrete shape afterTwo major announcements on thrusday and friday.
Everything hinges on what the government is willing to offer. It is now no secret that Intel CEO Craig Barrett has held several discussions with the Indian government about the possibility of setting up a fab in India.
The Union Cabinet's in-principle nod to the much-awaited semiconductor policy on Thursday brought cheer to the IT hardware industry. Although the fine print of the policy in terms of actual incentives for semiconductor projects is still awaited, the semiconductor players were quick to welcome it. Among other industry friendly measures, the policy provides for a direct subsidy of 25% of the capital expenditure incurred during the first 10 years of a semiconductor project.Yesterday a key executive hiring was announced. SemIndia, a company established by a consortium of overseas Indians with the goal of constructing a chip fabrication plant, said that B. V. Naidu, former director of the Software Technology Parks of India (Bangalore), would join the team.
Work on the second phase of the Fab City near the Shamshabad international airport here is all set to begin within the next four months following the in-principle nod given for the semi-conductor policy by the Union Cabinet in New Delhi on Thursday.
The State Government was sitting with fingers crossed about the Centre's policy since work on the first phase of providing infrastructure has been progressing at a brisk pace. It now expects the modalities relating to the incentive package and subsidy to be in place within a fortnight. The Assembling, testing, mark, packaging (ATMP) unit, which forms part of the first phase and is expected to cost US $ 150 million, will be completed within one year.
The Fab city once operational will produce 25 million chips annually and it is expected to handle 2.40 lakh wafers every year with each wafer holding one hundred chips. It would be a world class hub for advanced semiconductor and electronics manufacturing meeting the domestic as well as export demands.
If two more companies being contacted now also join the stream, India could boast of a major achievement in its race to compete in the global chip market. It is understood that Cypress, a leading solar cell manufacturing company, is also being contacted to establish a solar cell and solar module facility in the Fab City.
The Indian electronics industry is estimated to be $360 billion by 2015, with an estimated chip consumption of $40-45 billion, making it an attractive market for companies to consider setting up fab units in India. India produced electronics equipment worth $10.99 billion in 2005, according to Frost & Sullivan. The research firm predicts that figure will grow to $58 billion by 2010 and $155 billion by 2015.
Source: Red Herring, Economic Times, The Hindu
