The Government's effort to set up semiconductor wafer fabrication units is finally making some headway.
At least five global semiconductor makers have expressed interest in supporting the project in some way or the other. They include Infineon Technologies, ST Microelectronics, Russian major Sitronics, GlobalFoundries and a consortium comprising Jaypee Associates, IBM and Israeli firm Tower Jazz.
Sources in the Department of Electronics and IT (DEITy) said that feelers were also sent to other technology firms, including Taiwan Semiconductor Manufacturing Company (TSMC), Intel and Freescale.
“While Freescale and TSMC have declined the proposal, Intel has offered advisory support on infrastructure and financial matters related to semiconductor manufacturing,” the source said.
GlobalFoundries (earlier part of AMD) has indicated that it can offer know-how for 200 nm technology and also consultancy on process intellectual property.
An empowered committee, set up by the DEITy to monitor the progress of the project, has selected consultancy firm Accenture to make a detailed business proposal to enable the semiconductor firms take a final decision on investing in the project. PricewaterhouseCoopers had also submitted its bid but lost out on pricing. Accenture quoted Rs 38 lakh for the contract compared with PwC's Rs 79 lakh.
Semiconductor fabrication is an essential requirement for promoting local manufacture of electronic items. The Government wants to have at least two semiconductor wafer fabs in the country, for which it has been scouting for companies that can offer technology and investment.
In June 2011, the Government had invited technology providers and investors to submit a preliminary EoI for setting up of semiconductor fabs in the country. The empowered committee set up to evaluate the progress of the project recently met to discuss the response received.
“We have got various proposals from different companies on how they can contribute to the project. Applied Material Ltd, for example, has expressed interest in developing human resources required for the fab project and it is looking at the possibility of doing R&D in the manufacturing centre,” said a Government official.
MNC-PSU partnerships
The panel has also recommended that DEITy should explore possible partnerships between multinational technology firms and Indian public sector units like BEL and BHEL. But the actual investments from these companies will come only after the Government makes it clear on how it plans to support the projects financially. All the countries where fabs have been set up have offered fiscal incentives to the investors.
“The Finance Ministry is of the view that incentives should be linked to production and marketing through indirect tax concessions rather than provide equity or grant. This would ensure that the investor and technology provider brings marketable cutting edge technology,” the official said adding that the empowered panel has taken a view that a mix of grant and marketing linked incentives might be required to attract investors.
The Planning Commission will give its inputs to Accenture to develop a business package that will be offered to the technology firms. Interested technology firms will be asked to send their proposals on what incentives they expect from the Government and how they plan to execute the project.