BANGALORE, INDIA: The recent decision of the Indian Government to set up two semiconductor wafer fabrication (fab) manufacturing units in India is a 'giant leap' for the sector, says a CyberMedia Research report.

According to Faisal Kawoosa, Lead Analyst, India Semiconductor Practice, CyberMedia Research, "Setting up a fab unit is an indicator of the government’s seriousness to establish a mature semiconductor industry. It would help India graduate from a supporting market to a chip manufacturer.”

He added that investing $ 5 billion in the two fab units means empowering this strategic sector and driving market segments that contribute to the growth of the entire ecosystem.

Kawoosa, reiterated, “Development of the semiconductor industry would also provide a boost to the country by increasing the volume and value of domestic manufacturing, conservation of foreign exchange, and a fillip to research and development, excellence and quality centricity.”

Indian Electronic market to grow 30 p.c annually

India is a large consumer market and as per the Electronic Industries Association of India (ELCINA), the India electronics market touched US$ 70 billion in 2010 and will grow at approximately 30 per cent annually to reach US$ 158 billion by 2015.

The growth would be propelled by a large middle class consumer base purchasing electronic devices like desktop computers, laptops, mobile handsets, media tablets, LCDs, DVD players and so on.

"A key for the success of the semiconductor industry in India would be how soon the proposed fabs are made operational. If the exercise takes several years to conceptualise and plan, it would not yield effective results, because of the volatility of the global electronics markets, both in the consumer electronics as well as the enterprise segment", stated Anirban Banerjee, Associate Vice President, Research and Advisory Services, CMR.

He added that the Government of India needs to view the semiconductor industry as a priority sector so that it is implemented on a fast track basis. The road map should envisage the development of manufacturing facilities as well as sectors where the locally produced chips would get consumed.

“Besides, the industry should not skew its focus towards a particular end-market, for instance, solar energy panels," Anirban added.

"The two key signals that the industry would do well to watch out for in the next few months are – the time frame in which decisions are taken and implemented, and the approach towards maintaining heterogeneity of the semiconductor industry. This will decide to a large extent the long-term prospects of the India semiconductor sector", Faisal Kawoosa concluded.