Despite renewed efforts, India continues to be a non-starter in semiconductor wafer fabrication (FAB) manufacturing, according to industry experts.
With none of the players coming forward within the set timeframe, the Department of Electronics and Information Technology (DeiTY), was compelled to allow time till November 25 for prospective companies from the earlier deadline of November 6.
A FAB unit manufactures integrated circuits and chipsets, central for the functioning of electronic devices. “FABs contribute significantly to the growth and development of the economy and will help in arresting imports of electronics, which may exceed oil imports by 2018,” a former AMD official told Express.
He added that the lack of interest from global players was primarily due to the bleak economic environment. A typical FAB requires about $3-5 billion investment.
With an intent to reduce imports, the government last month, apprised manufacturers of the quantum of subsidy and other benefits it can offer. India allows 100 per cent FDI under the automatic route in fabs.
In 2012, the Indian semiconductor design industry, including VLSI design, board/hardware design and embedded software development, was estimated at $10.6 billion. And demand for electronics hardware is expected to cross $400 billion by 2020. Of this, demand for semiconductors is expected to be nearly $50 billion.
“India is a potential market for electronics. But the timing is not right for FABs as it involves huge investments considering high capital costs,” he said.
Nearly 2,000 chips are designed in India every year and the country employs more than 20,000 engineers in chip designing and verification.
The Government of Andhra Pradesh’s dedicated Fab City industrial park, though started with much fanfare in 2007, currently houses few solar panel and electronic component manufacturers. “There received fresh proposals sometime ago and we are examining them,” a government official said.
The Indian government first floated FAB proposals in 2011 and over 30 applications were received, out of which two projects were short-listed namely Jaypee Group with IBM as technology partner and Hindustan Semiconductor Manufacturing Corporation along with STMicroelectronics.