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Rediff.com  » Business » Govt to back setting up a microchip facility in India

Govt to back setting up a microchip facility in India

December 16, 2010 12:28 IST

India is ready to enter the small and elite group of world chipmakers, with the first such facility in the country receiving strong support from the government of India.

The state-of-the-art facility, which sources believe would cost around $3 billion to set up, could reduce India's 100 per cent reliance on imported chips from a select group of foundries in countries like Taiwan, China and Israel.

Sources in London and within the semiconductor sector in India said this feat has been achieved after more than five years of intense lobbying by the domestic industry.

With nearly 130,000 embedded-software, chip-design and board-design professionals in India as well as a large captive market, India is ready to climb straight to the top of this group of chipmakers.

Sources also said an announcement on setting up such a facility in India is expected to be made soon by the government.

A spokesperson for Bangalore-based India Semiconductor Association declined to answer queries on this latest development.

"India has significant design capability and also a huge market. The only thing missing was the manufacturing capability. Looks like that gap would also be soon bridged," said a source in London.

The delay in such a project taking off so far has been due to the massive investment needed and the problem of making the unit profitable, thus keeping the private sector at bay.

"Without heavy subsidies and financial support of the government, it is not possible to set up such a facility," added the source.

Major units in Taiwan, China and Israel are all supported by their respective governments, with Taiwan commanding a 47 per cent global marketshare.

Chipmakers are divided into two broad categories: Captive fabricators comprise popular brands like Intel, AMD, IMB, TI, NXT and ST Micro.

The other large group, known as foundries, is what one may call contract and custom manufacturers, not dedicated to one brand. Taiwan's TSMC and UMC, China's SMIC and Israel's Tower come under this category. India's proposed facility will fall under the second category.

Apart from the most well-known application in computers, chips have a very broad set of applications in the telecom, aerospace, defence, medical, automotive and industrial sectors.

 

S Kalyana Ramanathan in London
Source: