$3 billion semiconductor plant set to roll in India

Sufia Tippu
Wednesday, 07 June 2006 23:39

IT Industry - Market

A $3 billion semiconductor fabrication plant, the first of its kind to be set up in India is ready to take off with almost all the pieces falling in place.

SemIndia Inc., a consortium of non resident Indians (NRIs), that had wanted to set up an ecosystem for chip manufacturing in India, had approached the Indian government about a year back to set up a semiconductor park. After an intense race between the three southern states of India (Karnataka, Tamil Nadu and Andhra Pradesh) to bag the project, it was finally decided that the location would be Andhra Pradesh.

The young and dynamic Union Minister of IT and Comunications, Dayanidhi Maran, who is fondly being looked upon as the “father of Indian semi-conductor manufacturing” because he is aggressively spearheading the semiconductor initiative in the country on Wednesday formally sealed the project. He laid the foundation stone for the park in the outskirts of Hyderabad, a city renowned for its old world charm mingling effortlessly with the IT activity in the software space.

A recent report by Frost and Sullivan indicates that the demand for electronics consumption would reach around $340 billion by 2015.  This would mean that India has to import more than $40 billion of semiconductor components. 

“This is one of the prime reasons why the Government is taking an active step in establishing component suppliers to the companies such as Nokia, Motorola, LG and Elcoteq. The Indian products would cost as much as 15% higher if we depend on 100% imports of the components,” Maran said.

Earlier this year, SemIndia tied up with other semiconductor leaders like AMD and electronic hardware manufacturers like Flextronics for investment in the semiconductor park. On Wednesday, it announced that SemIndia is announcing yet another major investment by Base Oxygen Corporation (BOC), a 4.6-billion-euro industrial leader.

“Nobody can afford to ignore a market like India. India is being rated as third largest economy in terms of purchasing power parity. “My Ministry has been supporting this industry, right from the beginning by giving a comfort letter for interested entrepreneurs to execute their plans.  We are aware of the immense technical and capital-intensive challenges that they have to go through,   before they become successful   in the semiconductor manufacturing sector, “We are nearly three decades behind when compared to the other major countries like USA, Japan, Taiwan, Singapore, and Europe,” Maran added.

Several CEOs have been meeting him and indicating their interest to set up their manufacturing base in India. “I am also personally going to Singapore, Korea and the USA in the next six weeks to speak to all the semiconductor manufacturing eco-system partners and invite them to India. These include the sophisticated fab equipment companies such as Applied Materials, ASML, Tokyo Electron, KLTencor, etc.
“With this semiconductor fab coming up, we intend to put India on the global map of advanced manufacturing,” says Vinod Agarwal, a renowned professor from the US who has turned entrepreneur and now heads SemIndia.