India: the new hot spot for fabs?

March 23, 2007

India's government has finally come up with a package of tax breaks and interest-free loans to attract semiconductor manufacturers to set up shop in the country. With this new plan in place, India is expecting (according to news reports) to attract $6 to $9 billion in investments in three years.

India's Minister for IT and Communications Dayanidhi Maran has even told the press in India that the policy should help attract global chip companies to set up two to three chip foundries worth $2 to $3 billion each by 2010, with Intel among the first he would target to entice.

Intel however, is still mum…in fact, I'm still waiting on a phone call back to see what their comment may be about this.

India's Union Cabinet approved the policy last month whereby subsidies would be provided in the form of tax breaks and interest-free loans amounting to 20 percent of capital expenditures for projects in special economic zones and 25 percent of projects elsewhere - with the caveat that interested semiconductor companies would need to invest at least $570 million to qualify for the subsidies.

Further, an appraisal committee to be headed by the Additional Secretary in the Department of IT is expected to be formed soon with the committee to receive expressions of interest from interested parties and submit its recommendations to the government.

India's plan sounds encouraging but for anyone who has attempted to set up a business in the country, dealing with the government is no small task and Westerners are typically baffled by the layers of bureaucracy in seemingly straightforward transactions. Fortunately, Intel's global dominance and experience would save them here, but remember, there is good reason beyond just tax breaks and subsidies for not building fabs in India namely, basic services such as water and power as well as a large enough talented labor pool.

The next five years will be a very interesting time in the development of India as one of the next possible hot spots for chipmakers — what do you think?

-Ann Steffora Mutschler, Senior Editor

Posted by Ann Steffora Mutschler on March 23, 2007 | Comments (6)

April 3, 2007

In response to: India: the new hot spot for fabs?
FR commented:

What about the Sillicon Border project in Mexico? www.siborder.com could it represent an alternative to India?

March 28, 2007

In response to: India: the new hot spot for fabs?
Gopal commented:

No matter what India provides, Intel is not one of the corporations to start a first fab in India or elsewhere. Intel is conservative company that never likes to take risk. As for as I know, Intel?s culture about semiconductor manufacturing does not let it risk on spending $2 to $3B in a country is not known to semiconductor manufacturing. The latest announcement to open a fab in China proves. I do agree that India is lacking in infrastructure. The present Indian government and intellectuals are trying hard to bring semiconductor manufacturing in India. It is the right time to bring fabs in India and that will help Indian IT industry to grow and mature further so that it can utilize the brain power of the young engineers. Indian universities such as IIT and IISC have brainpower but they lack in facilities such as clean room, semiconductor fabrication equipment, etc. I wish one of the foundries or semiconductor companies should start the fab in India. Are there any takers? What about memory makers? Samsung? Hynix? Micron? Infineon? Powerchip?, etc. India is the largest democracy in the world and its political system is stable. People are peace loving and are always welcoming foreign companies to come and invest. I don?t believe infrastructure is the only factor that delays/stops the start-ups?

March 25, 2007

In response to: India: the new hot spot for fabs?
dwaraka commented:

Good to see such a great move, our IT minister really doing great job, But we have to wait and see how long Govt will be able to keep attracting global chipmakers. This package of attraction should be for long time lets say for atleast next 20 years... Let us hope for the best

March 25, 2007

In response to: India: the new hot spot for fabs?
Govind Singapore commented:

This is a piece of good News, as this is one of the long awaited business to start-up in India. Definitely can be made sucessfull as available of huge potential human resource and other facilities. I too agree that India has some infrastructure problems, though I am confident that the problems can be fixed by proper development problems. After all I am pretty sure that Semicon business in India would be more sucessfull than anywhere in the world.

March 24, 2007

In response to: India: the new hot spot for fabs?
Raj commented:

It is very possible soon. India might lead in semiconductor field same as in IT

March 23, 2007

In response to: India: the new hot spot for fabs?
RF_Austin commented:

There is an interesting article in this week's Business Week which points out the significant infrastructure problems in India, including inadequate transportation, water, and power generation/distribution. Add to this the increasing disparity between the poor rural folks and the urban middle class and there is likely to be increasing social strife in the coming years. Given the issues described above, it would take guts to place a state of the art fab in India at this time.

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