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Vinod K. Agarwal
Vinod K. Agarwal

P. Manoj

'Desi' silicon chips to bring cheers to Indians 'Desi' silicon chips to bring cheers to Indians

Bangalore: He is attempting what big names such as Intel and IBM have not dared to: put India on the world silicon chip-making map by setting up a foundry here and grab a slice of the global $220 billion chip pie from heavyweights such as China and Taiwan.

And, the ultimate aim, says Professor-turned-entrepreneur Dr. Vinod K. Agarwal, is to bring millions of manufacturing jobs, and drive down prices of gadgets such as personal computers, cellphones and DVDs so that they become affordable to the common man.

SemIndia Inc., floated by Prof. Agarwal and his colleagues, recently announced plans to set up a silicon wafer manufacturing plant, commonly known as fab in the country, with technology licensed from U.S. chip-maker Advanced Micro Devices (AMD) Inc. A fab typically costs $3 billion to 4 billion to build.

It took a little bit of cajoling before AMD consented to part with its microprocessor manufacturing and chip-making technology to SemIndia, recollects Bhopal-born Prof. Agarwal, who spent 14 years teaching semiconductor technology at McGill University in Montreal, Canada before venturing into business by founding LogicVision in the U.S. in 1992.

"We had to adopt a different model than the one generally followed for setting up a fab. We tied up our model to the local market where AMD has a growing number of customers," says the PhD from the John Hopkins University, Baltimore.

The SemIndia fab will also be catering to a clutch of electronic firms looking at India as a high-volume market. The local market for chips alone is currently worth $800 million and is expected to reach $35 billion by 2016. Prof. Agarwal reckons that India now has the critical mass to make silicon wafers to feed a hungry market for mobile phones, PCs, set top boxes and DVDs, and the days of research and development-driven investments are over. "R&D cannot deliver prosperity to a billion people. It is manufacturing, manufacturing and manufacturing. If we don't start manufacturing today, we will be left behind forever," he told The Hindu during a visit to the information technology hub of India.

Key element

Chips are a key element in consumer electronics and electronics systems are increasingly loaded with software where India's software industry has an edge. "If we make chips here and the chips are used to assemble PCs here, it will result in cost savings of 10-30 per cent. Simultaneously, if the Government cuts taxes and tariffs for making chips and electronics in India, it would mean savings by another 10 to 30 per cent. So, the overall reduction in computer costs can be 40-60 per cent straightway if we make wafers here. This will drive down prices from about Rs. 10,000 for an entry-level PC bundled with a broadband connection provided by state-owned BSNL and MTNL to about Rs. 5,000-6,000. That will be fantastic in terms of affordability, benefits to the users and better productivity," he explained.

Besides cutting prices, a fab will generate direct blue-collar jobs for 2,000 to 2,500 people. Indirectly, it will generate hundreds of thousands of jobs that will spring up around the fab eco-system.

It will whip up excitement among hundreds of chip-designers in India to see that the chips they design are manufactured right here. In the absence of a fab, the chips designed here are now manufactured in foundries located outside.

Prof. Agarwal feels that Governments both at the Centre and in the State should provide assistance to make the fab a reality, as it has happened in other parts of the globe. "This would motivate many more chip-makers to set up foundry here," he adds.


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