BANGALORE, INDIA: A very interesting question was recently thrown at me: what sort of semiconductor policy should Karnataka adopt as a state! I shall attempt to highlight some of the activities the Karnataka government can look at doing in the semicon space.

First, let us go back to last September, when the Indian government had issued fab guidelines. Besides wafer IC and solar/PV fabs, the Indian government is also seeking investments in ecosystem units for LCDs, OLEDs, PDPs, solar cells, photovoltaics, storage devices, advanced micro and nanotech products, etc.

The ecosystem units have been 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.

For starters, the Karnataka state needs to have a long-term semiconductor policy in place, running 20-25 years or so. This semiconductor policy cannot be a short-term plan!

It would be prudent to have the top Indian leaders from Indian firms and MNCs, e.g., Ittiam, MindTree, Synopsys, Cadence, TI, Analog Devices, as well as the Indian Institute of Science and some other leading technology institutes, be the part of a core state semiconductor policy team to oversee the implementations. Future governments would only need to update the status and keep it rolling forward.

Good incentives need to be built in as well, including more tax holidays, etc. The role of the government picking up stakes in some projects should be examined simultaneously.

Next, the focus of a semicon policy should be aimed at solving some particular local problem, which can go on to solve a much bigger problem for India.

All of this should be done with, keeping in view to improving the infrastructure in the state, such as roads, water, electricity, etc. Foreign investors would shy away if infrastructure issues were not tackled first.

In this context, the Karnataka government should first look at having some solar/PV fabs in the state. Next, it would be prudent to pursue a policy of attracting companies in the verification and testing domains. Rather, have companies in the ATMP space, a pointer, which has been coming up in most of the discussions. Nanotech is another area that can be explored.

As an example, last year, an Israeli company, Nova Measuring Instruments, was keen on entering India. Nova develops, produces, and markets advanced monitoring, measurement and process control systems for the semiconductor manufacturing industry. It should be pursued to start assembly and testing of products in the state.

Wafer IC fabs are probably going to be a tough act to follow, not that it is unachievable. Unless a company can get the requisite funding for a 300mm fab, it is not advisable to follow that path. However, there is room for developing 200mm fabs, or even 150mm and 180mm fabs. These can be used to develop indigenous and simple applications. If such fabs are developed, those offering fab-related services can be attracted as well.

The Indian semicon policy statement also speaks about having ecosystem units. It would be advisable to attract smaller companies and look at setting up manufacturing units. As an example, Synopsys's Subhash Bal had once pointed out how RFID can be used in a host of applications. That's not all. Why not pursue companies in the PDP and OLED/LED spaces as well, besides those manufacturing LCDs, even if smaller-sized.

Finally, consider attracting and promoting companies in the fabless space, as it looks to be the way ahead for the semiconductor industry.

Here is a 10-point program for the Karnataka government to consider as a likely semiconductor policy.

1. Consider a long term semiconductor policy running 20 to 25 years or so.
2. Establish core team of top Indian leaders from Indian and MNC semiconductor firms, as well as technology institutes in Karnataka to oversee policy implementation.
3. Incentives such as government support, including stake in investments, and tax holidays.
4. Strong infrastructure availability and management.
5. Focus on having solar/PV fabs in the state.
6. Consider having 150/180/200mm fabs that tackle local problems via indigenous applications.
7. Look at developing companies in the assembly testing, verification and packaging (ATMP) space.
8. Attract companies in fields such as RFID, to address local problems and develop local applications.
9. Pursue companies in the PDP, OLED/LED space to set up manufacturing units.
10. Promote and set up more fabless units.

There should be some steps to create specific zones for setting up such units for fabs, fabless, ATMP, manufacturing, etc., all spread equally across the state. Finally, such a policy can be pursued by other states, besides Karnataka.

I am sure there are lots of experts around. Would love to hear what's their take on this subject.