India attracts $600 Mn towards chip manufacturing
By siliconindia   |   Saturday, 12 January 2008, 00:24 IST
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Bangalore: India's attempt to become a chip manufacturing hub may still be restricted to plans and blueprints. However, the country is attracting significant investments directed at setting up facilities to assemble, test, mark and package chips, with support of some companies, reported Livemint. Over the next three years, SPEL Semiconductor, SemIndia, and Tessolve is looking to invest $600 million (Rs2,358 crore) in such so-called ATMP facilities. According to analysts, in Taiwan, Malaysia and Singapore, ATMP facilities have served as a forerunner to the development of chip making or fabrication. Companies working in the ATMP space estimated the industry at $20 billion and its growth at 4.2 percent a year. This year will see at least two ATMP facilities beginning operation in India. The two projects of SemIndia and Tessolve that were announced in 2005, will be completed by the end of the year. "On average, globally competitive ATMPs, such as the ones in Taiwan, have sales in the range of $3-4 billion. Compared with that, India has a long way to go and we are (account for) less than one percent of the global ATMP market. But with announcements of other ATMPs and the fab city (in Hyderabad), we can expect the supporting semiconductor ecosystem to flourish," said D. Balakrishnan, Chief Operating Officer, SPEL. In a bid to be globally competitive, Chennai-based SPEL planned to invest $286 million in a special economic zone (SEZ) near its existing facility in Chennai. However, despite securing necessary approvals from the Centre, citing procedural delays, the company has put its SEZ plans on hold till 2009. Meanwhile, SPEL is looking to raise $5 million of debt by July and another $20 million of debt and equity in 2009-10 as it expands its existing capacity. The company aims to almost triple its capacity from 435 million units per annum now to one billion units per annum in 2009-10. SPEL has already raised $7.7 million in 2007-08 with $2.2 million coming from California Micro Devices, and the rest from Indian Overseas Bank. It has 29 active customers, including Fairchild Semiconductor (Malaysia), California Micro Devices, Alliance Semiconductor and Taiwan's O2 Micro. In Sriperumbudur, the construction for an ATMP facility by the San Jose-based V. Veerappan, co-founded chip assembly and testing firm Tessolve begins next week, nine months behind schedule. According to Veerappan the company has "secured the first round of funding of $30 million two months back from investors in U.S.," and expects a "second round of funding of $50 million to come in within the next six months." Tessolve's $200 million facility will have the capacity to produce three million packaged units a day. The company already has an engineering facility in Bangalore where it offers testing services. SemIndia's $100 million ATMP facility at the proposed $3 billion fab city in Hyderabad has been delayed too.

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