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Let 'Fab' not be just a fable!

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CIOL Bureau
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HYDERABAD: India Inc. better watch out. While the brouhaha over outsourcing and an attempt to gain a foothold in global IT industry is still on, headlines on India being mulled as preferred hardware-manufacturing destination is hogging the public eye.



Just about last week, Andhra Pradesh chief minister 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 preferred locations for its next manufacturing unit. So, whether these announcements are just going to be a virtual storm in the teacup or actually materializing to help strengthen India on the global radar remains to be seen.





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 billion, for which the government has allocated 50 acres of land and is aimed 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 had 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 no big deal. The seriousness of the company involved, whether how the planned investments of over a billion and more dollars would apparently produce desired results, and if the state supports the required infrastructure has to be looked upon.



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 quite unclear on whether, the company is mulling any such tie-ups in the country or abroad.





Also, the phase-I facility involving $ 600 million - $ 700 million 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 fuel the process of making the plan into action.



And this being a first-of-its-kind of unit, since India missed out on IT hardware manufacturing opportunities, lot more study has to be undertaken by the government to avoid any fatalities and extend all possible support, be it in the form of quality power, water, or flexible customs procedures. Only then, the entrepreneurial visionary and dynamic energy of the country and the governments could be evident for the world and would equally give a boost to the country's economic prosperity.





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