'FAB' Shouldn't Become a Fable!

DQI Bureau
New Update

India Inc. better watch out. Even as the brouhaha over outsourcing still

rages, and the debate about the extent of the foothold India has gained over the

global IT industry continues unabated, headlines about India's having

"made it" once again, this time as a preferred hardware-manufacturing

destination are slowly becoming the norm, making India the cynosure of all eyes

once again.


Just about last week, Andhra Pradesh chief minister YS Rajasekhara Reddy

declared that a Seoul-based company has decided to set up a billion-dollar chip

making unit, while Intel CEO announced that India figures as one of the many

preferred locations for its next manufacturing unit. But whether these

announcements will amount to anything and help India strengthen its trace on the

global radar, or just remain mirages in the desert yet remains to be seen.

YS Rajasekhara Reddy recently announced that a Seoul-based company has decided to set up a billion-dollar chip-making unit, even as Intel's CEO announced it was considering India for a fab unit


It was also announced that Korea-based, Intellect Inc. has decided to set up

a fab facility in two phases with over investments of $2.6 bn, for which the

government has allocated 50 acres of land. The project also aims at generating

10,000 employment opportunities. Call it catching the prospective investors or

stepping on the gas to showcase the party's prowess, through the announcement,

the Andhra Pradesh chief minister has, either way, raised many an eyebrow.


The state government has been flaunting facts and figures as to the kind of

investments being pitched in for the facility, the amount of land the government

is allotting and the number of employment opportunities the proposed fab is

going to generate. But it must understand that a company submitting a project

proposal with investments required and considering setting up a facility is not

such a big deal. The seriousness of the company involved, whether and how the

planned investments of over a billion and more dollars will produce desired

results, and if the state supports the required infrastructure are all factors

that have to be looked into.

Above all, it's imperative to determine if there exists a potential

consumer market for the chips that would be manufactured in the proposed

facility. For this, the company needs to have tie-ups with various firms that

would require them. And the state government is pretty unclear if the company is

mulling on any such tie-ups at all in the country or abroad.

Also, the phase I facility involving $600-700 mn is expected to be a

rudimentary unit or possibly a kind of relocation of the existing unit

somewhere, as per industry sources. The government should also take into account

that there already exists an excess capacity globally in chip making. Biggies

like China, Korea have flooded the market in advance, so it is crucial to focus

on the increasing demand for semiconductors with a growing base for consumer

electronic goods and mobile telephony market in India, and expedite the process

of materializing the actual investments. For this, the state government should

set up a team of technical experts to evaluate the implications of the facility,

provide suggestions if any, and that can also strongly put the plan into action.

And this being a first-of-its-kind of unit, since India missed out on IT

hardware manufacturing opportunities, a great deal more study has to be done by

the government to avoid any fatalities and extend all possible support, be it in

the form of quality power, water, or easy customs procedures. Only then will the

entrepreneurial visionary and energy our country possesses in titanic

proportions can be evident to the world and equally give a boost to the country's

economic prosperity.

Sunitha Natti/CyberMedia News