India starts hunt for fab-building chipmakers

by Peter Clarke , TechOnline India - June 01, 2011

A committee recently set up by the Indian government to help drive the establishment of semiconductor manufacturing in the sub-continent, has conducted its first meeting and has started approaching chip companies to ask them to set up wafer fabs there.

A committee recently set up by the Indian government to help drive the establishment of semiconductor manufacturing in the sub-continent, has conducted its first meeting and has started approaching chip companies to ask them to set up wafer fabs there.

The meeting discussed a number of issues related to the setting up of wafer fabs, local reports quoted Sam Pitroda, leader of the committee, as saying. Pitroda is also an advisor to Indian Prime Minister Dr. Manmohan Singh on IT and communications infrastructure and innovation.

"We need to talk to principals who can invest in setting up facilities," he is quoted saying after the initial meeting of the committee, before adding "We will talk to them one-by-one in the next few months." Pitroda is also reported to have said that he has been in touch with "global semiconductor associations."

Pitroda reportedly said that India needs to make chips because otherwise its annual hardware IT import bill will grow to exceed its fuel import bill by as soon as 2020. "At this rate our import bill on IT hardware will touch $200 billion by 2020," he is quoted as saying in a Business Standard article. The import bill including telecommunications in 2020 – and Indians are big users of mobile phones – could be as high as $400 billion.

As semiconductors make up a significant part of the bill of materials value of electronic equipment, being able to manufacture chips locally not only relieves that import burden but can also be part of a domestic manufacturing supply chain to further reduce the import position in IT products.

The committee, set up in April, is chartered to help set up at least two wafer fabs at a cost of about $5 billion. Along with identifying technologies and potential investors, the committee will recommend the level of government support for the project and the mix of grants and subsidies. The panel's recommendations are scheduled to be delivered to the Indian government by July 31.

Two earlier commercial initiatives, SemIndia and Hindustan Semiconductor
Manufacturing Corp. failed to materialize. As yet there is no indication as to whether the Indian government has any preferred locations where it wants wafer fabs to be built.

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