Tessolve invests $250 million in Chennai chip plant

By Sufia Tippu
Sunday, 20 August 2006 15:29

IT Industry - Market

Fifteen years ago, the town of Sriperumbudur, on the outskirts of the southern port capital of Chennai hit the headlines because the 46-year-old Indian Prime Minister Rajiv Gandhi was assassinated by a suicide bomber.
 

Today, this small town, about 30 km from the capital of Tamil Nadu is almost always in the news.

It has become a world class manufacturing hub with the latest entrant being the TAPP Semiconductor (I), a subsidiary of US-based Tessolve, which announced Friday that it will pump in $200- 250 million in a semiconductor production and packaging plant at Sriperumbudur.

The company will initially invest $75- 80 million which will be scaled up over the next couple of years. In about three years, the facility will directly employ 1,700 people and most provide indirect employment to 5,000. It will have a capacity to make 400,000 to 450,000 units per day by end of 2007 and scale it up to 2.5 to 3 million units per day in four years.
 
“While the building will be ready by March 2007, equipment will be moved in by mid-2007 and production will start in July next year,” P Raja Manickam, founder & chairman of Tessolve said.

Its first customer in India is Bangalore-based Society for Integrated Circuit Technology and Applied Research (SITAR), a silicon chip manufacturer that supplies to defence and space organisations in India. Manickam added.

Chennai stakes its claim for IT manufacturing hub
 
World’s largest and second largest handset manufacturer as well as the world’s number one and number two players in electronics manufacturing services (EMS) have set up operations in Sriperumbudur.

Finnish handset maker Nokia was the first telecom company to set up a world-class Telecom Park last year. Since its production began in January this year, Nokia is set to make more than 25-30 million phones a year accounting for at least one-tenth of its global output.

Today, inside the Nokia Telecom Park, three Finnish component manufacturers for the mobile phone industry — Salcomp, Aspocomp and Perlos — as well as a Taiwanese player, Hon Hai Precision, have also begun their operations too, creating a strong eco-system for telecom manufacturing.

Soon Motorola followed and announced a $30 million investment plan to set up its manufacturing unit which would begin its production of low-end handsets in early 2007.
 
The world's second largest contract manufacturing player, the Singapore-based Flextronics, has also built up a large facility after its plants in Bangalore and Pondicherry and production of its cell phone and mobile base station products is likely to begin before this year end.

And there is the world leader Taiwan-based Foxconn, another EMS which had announced plans earlier this year to invest a total of about $110 million to set up an hi-tech Innovation Park jointly with the State Industries Promotion Corporation of Tamil Nadu (SIPCOT), and Motorola at Sriperumbudur.

Foreign managers of these facilities have no apprehension about India’s prowess in manufacturing. "I don't know why people say it was impossible earlier. We are doing it and you have the proof here,” said Jukka Lehtela, the Finnish operations manager at the inauguration of the Nokia plant early this year.