India plans its first commercial semiconductor fabs

The government said it will identify and support investors to set up two fabs

The Indian government has established a committee to identify technology and potential investors that could set up India's first two commercial semiconductor wafer fabs, the country’s Ministry of Communications and Information Technology said.

The committee, which is to submit its report by July 31, will also recommend the nature and size of government support to the fabs, which could range from equity participation to grants and subsidies in physical or financial terms, the ministry said in a statement on Wednesday.

The ministry put the rough cost of the two fabs at US$5 billion.

An investment of that level should be enough to pick up two second-hand fabs, said Poornima Shenoy, president of India Semiconductor Association (ISA), a trade body.

India does not currently have a commercial fab and that's been a bottleneck for the country’s electronics industry. The defense and space ministries run small fabs which mainly meet the requirements of government agencies.

It is good that the government has decided to take chip manufacturing seriously, Shenoy said.

An earlier government committee recommended, among other things, that the country set up semiconductor wafer fabs, and also give preference in government procurement to locally manufactured electronic products.

The domestic market does not require high-end, state-of-the-art fabrication capacity, said Rajiv Jain, associate director for government affairs at ISA. Most of the current demand for semiconductors in India can be met from a fab that processes 200 mm (millimeter) to 300 mm wafers, Jain added.

India has emerged as a key chip design location for a number of multinational companies including Intel and Texas Instruments.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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