Tuesday 17 September 2013

IBM, STMicroelectronics to invest $8 billion in setting up Indian fab units

The Government of India recently gave its stamp of approval to silicon wafer fabrication units being set up in the country. Now, the Telecom and IT minister Kapil Sibal has said that the new semiconductor fab units being set up will help create 22,000 direct and 1 lakh indirect jobs in India.

The India government has approved two semiconductor wafer fabrication manufacturing units, with IBM and STMicroelectronics leading two consortiums. Overall, the two facilities will be seeing around $8 billion (Rs 51, 550 crore) of investment. This move is definitely a strategic one on the government's part as it should help increase the flow of capital and increase the value addition of the electronic products natively produced. In addition, the India-based manufacturing unts should reduce the dependence on imports and also increase innovation in Indian product design.

The report states that IBM is pulling in Jaiprakash Associates and Tower Jazz of Israel as its partners to set up a unit in Noida. Overall, the first consortium will be pumping in around Rs 26,300 crore to set up the FAB facility. The facility will produce 40,000 wafer starts per month of 300 mm size, using advanced CMOS technology. In addition, the technology nodes being proposed will include 90, 65 and 45 nm variants in Phase I, moving up to produce 28 nm nodes in Phase II with the possibility of establishing a 22 nm node in Phase III.

The other consortium will have ST Microelectronics partnering up with Hindustan Semiconductor Manufacturing Corporation and Silterra of Malaysia. They will be investing around Rs 25,250 crore for the FAB facility of 40,000 wafer starts per month of 300 mm size, using advanced CMOS technology. Technology nodes proposed here include 90, 65 and 45 nm nodes in Phase I and 45, 28 and 22 nm nodes in Phase II. The second FAB unit will be set up in Gujarat.

Technology providers will be picking up at least 10 percent equity from both the proposed projects, while the government gets an 11 percent stake. All this could potentially help India out a lot. As earlier reported, the country makes use of close to $7 billion worth of semiconductor products every year. And reports have suggested this value may rise to $55 billion in 2020 when the total Electronic System Design and Manufacturing (ESDM) market is expected to reach $ 400 billion. The establishment of a native fab unit should definitely help foster a greater degree of self-sufficiency in electronics and also help reduce the high supply chain risks that the country currently grapples with.

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