Browse by year:
The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

Semiconductor manufacturing in India – its time to get on the fast lane

Dr. Dev Gupta
Sunday, February 4, 2007
Dr. Dev Gupta
Success in IT and even chip design has created eagerness among the software-heavy IT community in India to move up the food–chain viz, manufacture chips in–country by setting up Wafer Fabs. Over the last two years several promoters have been doing the rounds proposing to set up state of the art multi - billion dollar Wafer Fabs, supposedly with technology supplied by leading IDMs. Quite predictably nothing has come out of these schemes except swaying the Indian media and even the Government to the irrational exuberance of wanting to start semiconductor manufacturing right at the most complex level, regardless of the enormous financial and technical challenges! Unlike common garden-variety circuit design done using standard software packages with canned device models, semiconductor device development and processing require expertise in the hard sciences like Physics and Materials Science. Then there are the challenges of maintaining high efficiency in a complex manufacturing operation, where unlike IT, mistakes cannot be detected or fixed at a key-stroke!

To leapfrog the technology hurdles the IT and Finance Ministries of India have been considering subsidies to attract established semiconductor companies to set up Fabs - however stipulating that the technology transferred be of the latest generation. The annual production of a state of the art Fab—with very narrow process recipes in the interest of efficiency - and therefore narrow product types as well - has to be at least $2.5 billion per year. So long as the Indian demand for a specific high end product (e.g. Memory) does not exceed at least 60 percent of this threshold, there may not be any takers among the handful of IDMs that really matter - regardless of the subsidy. It is hoped that a stick and carrot approach is taken by the Ministries to boost semiconductor consumption in India, as otherwise it may not cross the threshold for at least 3 years.

Why MNCs are not exactly beating down the door to set up Fabs in India?

Semiconductor consumption in India is still too small (per In - Stat only about 1 percent of the world production) to tempt established Semiconductor houses to part with their proprietary technologies, and is expected to remain so for the next 3 to 4 years even if it grows at a CAGR of 30 percent. Current semiconductor usage in India is some $1.5 billion per year – distributed over a wide variety of applications (analog power devices, amplifiers, ICs, digital logic, processors, memory etc) that require a range of incompatible Fab technologies (CMOS, BiCMOS etc). From a strictly business standpoint no single state of the art Fab (95 nm, 300 mm, min. 300 k wafers per yr) can be operated economically at these levels.

By any standard the Mobile phone and PC sectors in India are already quite big and growing at a healthy rate. Approximately 25 million handsets and 5 million PCs were sold in India last year. A CAGR in excess of 30 percent can be expected for these systems. Since 2005, Nokia, among others, is assembling Mobile Phone handsets in – country, at 20 million units per year.

Share on Twitter
Share on LinkedIn
Share on facebook
Reader's comments(1)
Posted by: SME Business services - 09th Apr 2011
Messages posted on this Web site under the `Comments' area are solely the opinions of those who have posted them and do not necessarily reflect the opinions of Infoconnect Web Technologies India Pvt Ltd or its site www.siliconindia.com. Gossip, mud slinging and malicious attacks on individuals and organizations are strictly prohibited. Infoconnect Web Technologies India Pvt Ltd can not be held responsible for errors or omissions in content, nor for the authenticity of the user/company name or email addresses associated with posted messages. Infoconnect Web Technologies India Pvt Ltd reserves the right to edit or remove messages containing inappropriate language or any other material that could be construed as libelous, potentially libelous, or otherwise offensive or inappropriate.Infoconnect Web Technologies India Pvt Ltd do not endorse the products and services or any other offerings mentioned in these messages.