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India eyes piece of IC manufacturing market

Posted: 23 May 2007 ?? ?Print Version ?Bookmark and Share

Keywords:IC manufacturing? India IC policy? manufacturing market?

Already a major player in the global software development and services outsourcing industries, India is now gearing up to compete with the rest of Asia in the chip manufacturing market, stated a Reuters report.

Major semiconductor firms have already tapped the country for chip design but not manufacturing. However, a new government incentive plan along with India's low labor costs and the steadily increasing demand for electronic goods could change all that.

Consistent growth
A report from Global Insights found that China and India will maintain positions as the global growth engine for wireless services, having 60 percent of the 1.2 billion forecasted new mobile subscribers by 2011. The report also predicted that market penetration of wireless services will grow from 13.4 percent to 31 percent in India.

iSuppli Corp. also predicted that cellphone subscribers in India will triple by 2011. It noted that the number of subscribers in 2006 reached 149.5 million from the 85 million in 2005. Jagdish Rebello, director and principal analyst for iSuppli, commented that the arrival of less-expensive phones, declines in tariffs, pro-industry and pro-consumer regulations enacted by the government have been instrumental in the growth.

An ISA and Frost & Sullivan study stated that electronic goods consumption in the country would grow to $363 billion by 2015 from the $28 billion in 2005, posting 11 percent of the world market. In addition, it predicted India would use $36 billion worth of semiconductors in 2015, becoming one of the largest employers, creating 3.6 million direct jobs and an additional 5.6 million related jobs.

In February, the India government released its much-awaited IC policythe Special Incentive Package Schemewhich was expected to push forward the country's semiconductor manufacturing plans.

The incentive package offers tax breaks and interest-free loans to attract investors to setup IC manufacturing plants and other technology manufacturing facilities in the country. Chipmakers investing a minimum of $550 million will be given 20 percent of the capital expenditure for the first 10 years.

Promising signs
With this policy, the government expects to accumulate more than $5 billion in manufacturing investments within next few years. The fruits of India's ambitious effort are already looming ahead. In March, the Indian government disclosed that it has re-opened negotiations with Intel, and other chipmakers regarding plans to set up manufacturing sites in the country.

Last month, government officials disclosed construction of a prototype fab, which will be part of the India Design Center in Kolkata will begin in the next 12 months. NXP Semiconductors president and CEO Frans van Houten also announced that the company is eyeing acquisitions in India.

In March, foundry United Microelectronics Corp. revealed plans to open a support office in Hyderabad Technology Park to support India-based customers. Meanwhile, locak consumer electronics maker Videocon Ltd said it plans to spend $250 million to build an IC facility in eastern or southern India.

- Rhea Barua
EE Times-Asia

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