The Hindu : Business : ISA: Let the chip games begin

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Saturday, Feb 24, 2007
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Business

Business

ISA: Let the chip games begin

Anand Parthasarathy

HSMC announces $4 b chip making plans

BANGALORE: A day after the Central Government unveiled its semiconductor policy, euphoria still grips the domestic arms of the industry.

In a quickly-convened meeting to share its views on the policy, the Indian Semiconductor Association Chairman, Rajendra Kumar Khare, characterised the policy as a `historic and unprecedented' decision that would allow the country to join `the big boys' of the business — instead of merely competing for the `low hanging fruits' of information technology.

"We can move up to the club of leaders, not laggards,'' he added, "We can stake claim to a part of the global $1.4 trillion electronics products market where we are as yet not even a player.''

The two-year old ISA, which represents over 130 India-based semiconductor companies, played a key role in consolidating information about the chip business and convincing various arms of the Central Government about the long term benefits of having `desi' chip making muscle. Its wish list was slightly more ambitious than the broad government support of 20 percent for semiconductor manufacturing units announced — but it is still open to Delhi to sweeten the package in subtle ways, like infrastructural support, Mr. Khare felt.

Satya Gupta, Founder and Vice President of Open-Silicon, a leading Indian `fabless' chip player, said local manufacturing would mean `a plethora of products, sharply tailored for the unique requirements of the indigenous consumer, would now become viable.'

V. Veerappan, Co-founder and Director of Tessolve, another Indian company that specialises in chip design and testing services, said that the opening of the manufacturing business would benefit and expand the entire `ecosystem' of the chip industry — design, validation, fabrication, testing and consumption.

Even as chip industry players and ISA members were making upbeat pronouncements about the Government's fab-ulous role in kickstarting the foundry business, a silent spectator, got up to announce that a consortium that he headed would take up the government's offer — making it possibly the first outfit to sign up after the policy was announced. (The Hyderabad-based SemIndia is the only other India-based semiconductor company with a chip foundry in its plan).

`Fab-ulous' initiative

Devendra Verma, Managing Partner of a California-based venture capital group, Edgewood Venture Partners, said the group had joined some other investors to form Hindustan Semiconductor Manufacturing Co (HSMC), which had now decided to invest $4-4.5 billion in a two phased India-based chip manufacturing programme. It had tied up with an as-yet unnamed partner — one of the world's top five chip making players — for technology and product buy back.

In Phase I, HSMC would invest around $1 billion in setting up a plant that would work to produce 200 mm wafers and chips to a tolerance of up to 90 nanometre within two years. In Phase II, the company would graduate to 65 nanometre chips. It would concentrate on mass consumer devices for mobile phones, set top boxes and smart cards.

With the government's policy announced, HSMC would unveil full details of its operations, including the location of its fabs, shortly, Mr. Verma said. Andhra Pradesh, Karnataka and Tamil Nadu were in the company's shortlist, he added.

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