Government in Efforts to Create Chip Manufacturing Units in India

Date:   Tuesday , May 03, 2011

India enjoys a unique position it the global software development and outsourcing services sector and this has made the government feel the necessity of a chip manufacturing unit within India. With this aim the Indian government has renewed its efforts to create a chip manufacturing industry in India, and is looking for investment of about $5 billion to build two wafer fabrication companies.

Semiconductor firms such as Intel, Advanced Micro Devices and Freescale Semiconductor are already leveraging the Indian talent for chip design, but not manufacturing. New government incentives to boost chip making, rising demand for electronic goods from a fast-growing middle class, and India’s low labor costs might change this scenario. The government estimates that the creation of a chip manufacturing industry within India will help create 30 million direct and indirect jobs by 2020.

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 of completely Indian electronic systems. The level of government support for the plan would be finalized through discussion with interested parties. The support could be in the form of an equity position, grants and financial support. The newly-formed Empowered Committee for Identifying Technology and Investors for Semiconductor Wafer Fabrication (Fab) Manufacturing Facilities will produce a report before the project starts.

The Empowered Committee is composed mainly of political appointments but is expected to nominate industry experts and will submit the report 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. This initiative by Indian government is sure to boost the Indian semi conductor Industry.