Industry associations and information technology (IT) veterans said the Government’s decision to approve semiconductor wafer fabrication (fab) in the country will boost electronic manufacturing.

“This is a right direction to reduce the dependence on import, which is a key thing to promote the Indian electronics industry. Since last few years, many of the electronic products are based on semiconductor, so manufacturing chips here will be a right thing,” Ajai Chowdhry, HCL Technologies founder, told Business Line.

Multiplier effect

He said the step will also help companies and engineers in India who have been designing chips in various research and development centres. It will also help companies in sectors like automobiles as many of the companies import chips to be fitted in the vehicles.

“This will have a strong multiplier effect that will result in major strides forward in the value generated from all sectors within the semiconductor ecosystem. Manufacturing in India will soon witness a new frontier,” Aninda Moitra, President and Managing Director, Applied Materials India, said. Applied Materials is a global company in providing manufacturing solutions for the semiconductor, flat panel display and solar photovoltaic industries.

“We look at the fab as India building strategic technology capability that will leapfrog the country ahead by several years, in development of indigenous electronic products and aid in the development of a local fabless semiconductor industry,” PVG Menon, President, India Electronics and Semiconductor Association (IESA), said.

He said the presence of a local fab in India would boost the country’s capability to build intellectual property assets within India.

“We reiterate that in terms of its impact and implications, the fab must be treated on par with India’s investments in space and nuclear programmes,” he said.

‘will curb dollar outflow’

“Semiconductor consumption in India currently stands at about $6.54 billion and having a local fab will help contain this dollar outflow to a large extent. Disability costs associated with the absence of an ecosystem has been a critical challenge for electronics manufacturing in the country to take off,” Deepa Doraiswamy, Industry Manager, Electronics & Security, Frost & Sullivan said.

There are already applications for assembly-test-mark-pack (ATMP) facilities, the next in the value chain to fabs, made under the M-SIPS scheme and this approval will help in expediting those proposals as having fabs justifies the need for local ATMP as well, she added.

Semiconductors constitute about 10-15 per cent of any electronic product on an average (around 25-35 per cent for mobile phones and set-top-box) which implies the impact that can have on local value addition, if local sourcing of semiconductors becomes a possibility for indigenous electronics manufacturers.

(This article was published on September 13, 2013)
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