India to invest $5 Billion on commercial Semiconductor fab

By siliconindia   |   Friday, 22 April 2011, 21:37 IST
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London: India has carved a niche in global software development and outsourcing services. This made the government feel the urgency of a chip manufacturing unit within India. On such premise the Indian government has announced renewed efforts to try and create a chip manufacturing industry on the sub-continent. The government is looking for investment of about $5 billion to build two wafer fabs. Semiconductor firms such as Intel, Advanced Micro Devices and Freescale Semiconductor have already tapped India for chip design, but not manufacturing. But new government incentives to boost chip making and surging demand for electronic goods from a fast-growing middle class and coupled with India's low labour costs can change the senerio. The creation of a chipmaking industry within India will help create 30 million direct and indirect jobs by 2020, as per the government estimates. Lack of domestic chip making and reliance on chips made overseas is serving as a bottleneck on the development of complete electronic systems within India. The creation of wafer fabs would have a catalytic impact on the development downstram and upstream products. However the level of government support for the plan would be finalized by way of dialogue with interested parties. The newly-formed Empowered Committee for identifying technology and investors for Semiconductor Wafer Fabrication (Fab) Manufacturing Facilities will produce a report before the project kick starts. The Empowered Committee is composed mainly of political appointments but is expected to nominate industry experts and is due to report back to government by July 31, 2011. The committee has been empowered with the responsibility of identifying the sources of technology and potential investors for the establishment of at least two wafer fabs and to recommend the nature and size of government support. The support could be in the form of an equity position, grants and financial support. The global demand for chips will always go through a cycle of oversupply and shortages, but the potential in India is going to be huge in the years to come. Though a risky area to lay one?s hand and invest, it is bound to open avenues for India once it comes into force. This initiative by Indian government is sure to boost the Indian semi conductor Industry.