Friday, October 26, 2012

Yet another electronics policy for India?

India has once again announced an Electronics Policy, and frankly, I’ve lost count, how many times! Nevertheless, one hopes that this policy somehow takes off, and helps India get off the ground!  There are certain points in the policy that are worth a relook.

One, the setting up of electronic manufacturing clusters. This has been time and again stressed and re-stressed. Will it come around, this time? Let’s wait and watch, if it happens this time!

Two, as per the policy, there is a proposal for setting up two semiconductor wafer manufacturing fabrication facilities. Where? As far as one knows, there is hardly any infrastructure around to support even one semicon fab! Some people may say, Bangalore, but well, they are welcome to say that! As for people buying more of ‘domestically manufactured electronic goods’, it remains to be seen!

Three, back in 2007, when the SIPS program was announced, there were great expectations! If you recall some time ago, I mentioned that the Indian semiconductor policy, announced back in 2007, had supposedly expired on March 31, 2010! Then, the Indian industry came up with recommendations that included extending the Indian semicon policy up to March 2015! So, what happens to that? Or, is it dead and buried?

Four, back in 2007, the ‘ecosystem units’ were clearly defined as units, other than a fab unit, for manufacture of semiconductors, displays including LCDs, OLEDs, PDPs, any other emerging displays; storage devices; solar cells; photovoltaics; other advanced micro and nanotechnology products; and assembly and test of all the above products. What’s happening now?

Five, does all of this mean that the role of India-based semiconductor companies as a percentage of the semiconductor market globally, will improve? Or, do we take India as a system/gadget maker and thus, as a percentage of that market??

Six, fabrication is increasingly expensive, much involved and the actual global fabrication players are declining and will be about three to four companies. There is talk of 450mm fabs across the world! Have we even heard a word from India?

Okay, so let’s say, India will have two fabs? By when? What process technology? If it is a 450mm fab, India can very well kiss goodbye to this decade, at least. And, India continues to slip back in having a ((proper) fab!

What should India do?
If India produces domestically consuming gadgets, that are more India specific, that could need devices available less outside. For that purpose alone, a local fab could be essential. However, such requirements appear less each day!

Again, to the point of sounding boring and repetitive, fabless semiconductor could be the way forward for India. However, in terms of India becoming a global player through such chips conceptualized in India, for India and the world, the chance is lesser, for now!

Hasn’t the Indian semiconductor industry been shouting ‘fabless’ from the rooftops for some years now? In terms of having India-based companies working toward developing chips, in terms of smaller, analog, components that are crucial, and in terms of having IP-based companies, and, in terms of increasing service companies, yes, India is ahead!

Many more companies are coming up, and some started directly here. However, the answer to the question remains NO in terms of having chips come out of India, as yet!

Let us also look at the key growth drivers in Indian electronics, especially, since we are talking about fabless and fab-lite. The obvious one is to develop solutions for the India market. It is likely that these can be for outside markets as well. This ability will make India develop solutions for global markets. These are not semiconductors per se, but, (embedded) solutions, a strong point for India!

The situation described above can lead to developing a fabrication and manufacturing ecosystem in India. India should try to position itself at the higher end of the solutions, markets, services, etc., so that its value contribution can be much more.

There are six government initiatives in the new plan: development of wafer fabs, Modified Special Incentive Package Scheme (M-SIPS), development of manufacturing clusters, Preferential Market Access Policy, Electronics Development Fund and developing National Electronics Mission.

What’s new here? These are all old stories, and not worth repeating! The time is now for action!

Friends, is there a way out of the current situation that India finds itself? Would be interesting to hear your comments!

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