The Hindu Business Line : SPEL Semiconductor plans design foray

SPEL Semiconductor Ltd, integrated circuit (IC) assembly and test company, plans to enter into semiconductor design in the next couple of years, according to its Vice-Chairman, Mr Ar. Rm. Arun. "We had to wait for sometime to decide, and feel it is time to look into this sector seriously," he said.

The company, which is part of the Chennai-based SPIC Group, would create a library of design models for companies to choose from, he said at the company's plant in Maraimalai Nagar, near here. SPEL would license these IP (intellectual property) rights to them, he added.

SPEL has so far focussed only on assembly testing of IC, which is a small electronic device made out of semi-conductor material. The architecture of the required circuit is designed using advanced software tools. The main features include circuit/layout design, verification and logic design, said the company's CEO, Mr Sam Varghese.

The $226-billion global semi-conductor industry comprises four segments — design, fabrication, assembly and testing. Some of the domestic software companies have been doing semiconductor design, and globally, companies such as IBM and Texas Instruments are major players in the sector. However, the country has no presence in fabrication, which requires an investment of over $3 billion in a plant, he said.

Other than getting into semiconductor design, the company's major focus is to reach revenues of $100 million (Rs 450 crore) by 2010. It plans to reach revenues of Rs 55-60 crore and a net profit of Rs 6.5 crore to Rs 7 crore for the current financial year, Mr Arun said.

The company is increasing its plant capacity to 330 million units from the existing 180 million units. It is also planning to raise $10 million (Rs 45 crore) to finance the expansion. It is looking at debt funds, and would also consider convertibles. The company is raising $5 million from banks in a couple of months. "Funding is not for revival, but to grow and establish something," he said.

Promoters open to stake sale: The promoters of SPEL Semiconductor, holding 58.98 per cent in the company, are open to selling their stake "to any extent" to a partner, according to Mr Arun. "However, we will not give up the company fully," he said to a query whether the company was up for sale.

As on September 30, 2005, the promoters hold 58.98 per cent stake in the company. Institutional investors and banks hold 3.97 per cent stake, UTI 0.02 per cent, NRIs/OCBs 2.87 per cent, private corporate bodies 4.90 per cent and the Indian public 29.26 per cent, he added.

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