India tries to get its fab groove going
By Chitra Giridhar, Contributing Writer -- EDN, May 23, 2006
Although India has a reputation as a desirable location for semiconductor design, it has had a difficult time attracting investors to build leading-edge chip plants. That appears to be changing, however.
Burgeoning customer demand for electronic goods is encouraging investors to rethink their geographical choices for fab locations, and India’s semiconductor market is predicted to grow over the next decade, making it a potentially attractive choice for a fab or two. According to Frost & Sullivan, the Indian semiconductor market was $2.8 billion in 2005 and is expected to reach $12.7 billion by 2010 and $36.3 billion by 2015.
“A vibrant product development environment demands an optimal supply chain, including semiconductor manufacturing,” says Satya Gupta, vice president of engineering for Open-Silicon Research, Bangalore, India.
In November 2005, SemIndia announced a state-of-the-art $3 billion plant that will be located in Hyderabad. This fab, according to SemIndia, will sport 200-millimeter and 300-mm wafer fabrication facilities based on technology from Advanced Micro Devices (AMD) and will manufacture chips for cell phones, PCs, set-top boxes, networking and other consumer electronics. In addition, SemIndia plans to set up an assembly, test, marking and packaging plant to provide a full range of related services. Broadcom, AMD and other chip makers are reportedly negotiating with the company for manufacturing deals. Flextronics announced in April that it has taken a minority stake in the venture.
Tessolve Services, an American semiconductor manufacturer that does most of its development work in Bangalore, announced plans to invest $200 million in India over four years to build an assembly-and-test plant for semiconductors. The company is establishing a facility to provide high-volume testing, assembling, packaging and prototyping. It is scheduled to be in operation by early 2007, according to company executives.
India currently has 10 wafer fabrication plants, most of which are small- to medium-size facilities that manufacture 3- to 6-inch wafers for logic and discrete chips. The country’s existing VLSI fab, an unprofitable government-owned company called Semiconductor Complex (SCI), was recently transferred to the Department of Space (DoS). The DoS plans to upgrade the facility to handle 35-nanometer geometry and produce specialized components for strategic defense and space applications.
Just recently the Indian government, after persistent lobbying efforts by industry groups, announced that it will provide “viability gap funding” for semiconductor projects. The government has set up the India Infrastructure Finance Company to take equity stakes in new semiconductor plants.
Although the recent announcements paint an optimistic picture for India as a semiconductor manufacturing site, some question its reality. Pradeep Kumar, vice president of STMicroelectronics, says he thinks the viability of locating manufacturing plants in India is questionable, because the market is small and the region still lacks a solid infrastructure, which semiconductor manufacturing demands.
Dhanukonda Rama, director of SoCrates Software India (a Toshiba Group Company), agrees. Rama says he thinks India should continue to focus on designing semiconductors and not on manufacturing them. He says that the resources being used to set up manufacturing facilities should instead be invested in improving design skills.
But some see room for both. “Chip fabricating facilities will complement India’s strength in chip design,” says Rajendra Kumar Khare, head of the India Semiconductor Association.
Related stories:
India is not the new China
The secret of semi success
