India has recently opened up for possible large scale semiconductor manufacturing. Though India has been leading in the are of chip design it lacked manufacturing facilities. Its one of the fastest growing markets for electronic equipment and hence semiconductors.
The Union Govt released an investor friendly Semi Conductor Policy on 22nd February, doling out a capital subsidy of up to 25% (22% if the unit is in an SEZ). The subsidy offered is in the form of tax breaks and interest-free loans. The Fab units located in SEZ would have the additional operating benefits under SEZ Policy! This is expected to fire up the competition to set up foundries in India. The exponential growth in mobile phone services, broadband, IP TV, digital cameras, MP3 Players, gaming devices etc is at present fully dependant on imports of semiconductors.
According to a ISA-Frost & Sullivan report, total consumption of electronic equipment in India would reach $363 b by 2015 at a growth rate of 29.8% from just $28.2 b in 2005. This would push the total market for semiconductors at $36.3 b by 2015 and increase the industry’s contribution to GDP from 2% currently to 12% in 2015.
The Indian market is said to be able to support 3 large foundries costing above US$3Billion each. The early bird, SemIndia with a US$3Billion Fabcity at Thukkuguda near New Hyderabad Airport, is straining to get the financial package in place. SemIndia has the added advantage of land allocation. It has also progressed on SEZ clearance. SemIndia is closely followed by HSMC and IEMC with their new semiconductor foundry project proposals in India.
•SemIndia promoted by Vinod Agarwal - US$ 3 Billion (12" Fab) at Hyderabad
•NANO-TECH Silicon India Pvt Ltd (NSTI) promoted by Dr. Jun Min - US$ 0.6 Billion (8" Fab) at Hyderabad
•Hindustan Semiconductor Manufacturing Co. (HSMC) promoted by Deven Mehta- US$ 4.5 Billion (8" Fab) - Location to be confirmed
•India Electronics Manufacturing Corp IEMC promoted by Rajendra Agarwal - US$ 3.0 Billion (12" Fab) -Location to be confirmed.
US$ 11 Billion can be brought into Srisailam Highway, if Govt of AP is successful in attracting HSMC and IEMC, in addition to the SemIndia and NTSI.
Apart from this, Intel, Qualcom and others have been waiting for the Policy to be released before announcing their India investment plans. It wouldn’t be surprising if more big ticket investments are announced in the coming weeks.
Powered by Fabcity and other large foundries, Srisailam Highway near New Hyderabad Airport is at the Right Point in Time, to turn into a Tech City of unparalleled richness. A city on its own!
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