What’s this EoI got to do with semiconductor fabs in India?

June 27, 2011

Last week, I was alerted to a news on a local daily, which simply read: Government invites EoI for semiconductor fabs! With all due respect, what is the need for an Expression of Interest (EoI) in the first place? At least, I fail to understand!!

Having spent most of my life in Hong Kong, Taiwan and China, I’ve seen plenty of fabs come up in the past decade, and before. Why? In the 1990s, no one used to even give a second look at Taiwan Semiconductor Manufacturing Co. (TSMC), which [I don't know if many are aware] started operations in 1987.

Back in the mid- to late-1990s, I had the pleasure of attending several trade shows at the Taipei World Trade Center (TWTC), Taiwan. In fact, I tracked the rise of the Taiwanese and Chinese companies in telecoms and semiconductors. Back then, no one even noticed TSMC, as well as the Chinese backed Semiconductor Manufacturing International Corp. (SMIC). However, the art of manufacturing, which had found its bearings in Taiwan, were steadily shifting to China. I even remember visiting Huawei in the middle of 2000, and later ZTE.

By 2000, many of the Taiwanese firms had moved their operations to China for managing cheaper labor costs. Today, China has assumed gigantic proportions, hasn’t it? Today, even TSMC is in the list of top 10 global semiconductor companies. I had even written a post congratulating TSMC for making it to the top 10 R&D spenders during 2010.

What exactly does this EoI from the government of India set out to achieve? Well, for starters, the EoI should come from the technology companies on whether they are interested to start a fab in India. By the way, do you know what happened to the SIPS or the Indian semiconductor policy announced in 2007? It sank without a trace! A Karnataka Semicon Policy was unveiled with great fanfare last year. The result? No takers!!

This time around, the Government has requested companies to send in their details, technology experience, including alliances, technology proposed, manufacturing capacity reports and quantum of investment involved (for the proposed project).

The fact that local consumption is likely to spike immensely is very well known to everyone. However, here’s where the enthusiasm fizzles out, or so it seems. How much of this local consumption will actually see products getting manufactured in India? And, that too, by Indian companies?

Not that I have anything against foreign companies running fabs, but what benefit is it going to bring to India, except, say, foreign investment? Where is the Indian managed fab? When will we actually see one, if I may ask? Why? India still does not have a fabless local industry! When will that particular aspect be paid attention to?

Isn’t it strange that six and a half years since it was set up (Oct. 30, 2004), the India Semiconductor Association (ISA) has yet to find any takers for a fab in India? A fab needs 24×7 power and water — those are the basic requirements. Which Indian state is capable of providing all of that at the moment?

Forget the EoI, there are certain things that the Indian semiconductor industry needs to do, lest it gets written out of reckoning in the global context.
1)  Focus on the needs of the Indian semicon companies only! (How many times do I repeat myself?)
2) Prepare industry reports that highlight the capabilities of Indian semicon firms.
3) I mentioned 10 points the Indian semicon industry needs to focus on in a post “Long wait for Indian semicon industry?”

At best, the Indian industry may still attract one or two global firms to set up some smaller units here. Beyond that, it looks difficult! However, I will still keep my fingers crossed, being overly optimistic!

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  1. Arun Bhattacharjee
    July 3, 2011 at 4:22 pm

    Dear Pradeep,

    Read your post on semiconductor fab and India’s poor status! Excellent story!! Will have to read your others.

  2. Anil
    September 7, 2011 at 4:59 am

    Pradeep
    Nice analysis. Have you heard about the outcome of the EOI? Thanks/Anil

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