Intel scoffs at India fab reports

BANGALORE: Intel India threw a wet towel on the industry’s hopes that India will finally get a chip fab, after all. Just two days after reports of Intel setting up a $2 billion fab in India, Intel India officials denied such a move in a rather elaborate debate revealing why India cannot have a fab in the near future.

Apparently Intel CEO Craig Barrett is reported to have said, "It should come as no surprise that we export our manufacturing operations to areas where there is a skills surplus, such as India," while in Australia.

Intel India’s denial made a good report on India’s non-readiness to attract any Fab investment. CIOL also contacted Texas Instruments, which had at one point in time, around 1994, toyed with the idea of setting up a chip fab. A simple question on why did TI India give up on its initiative threw some light on why India cannot have a fab in the near future.

"When we talk of setting up a fab instead of the science department and the IT ministry coming forward to help us, the finance ministry gets involved. We just do not understand why this should be the case," said a TI India spokesperson.

Regulations, clearances, red tapism, local government intervention and bureaucracy are all issues of concern while even setting out to plan a fab unit in India feels both the chip giants. "How much investment and how much job generation should not be the concern. On the other hand, it should welcome such high tech fab to the country. Investment and job opportunities would automatically follow," felt the TI spokesperson.

The cyclic lower demand and excess capacity of chips would also play an important role for a fab plant. Although China is the only comparable market to the US in size of consumption, India is considered to be a miniscule. But this has not deterred these companies to go to countries like Malaysia, Philippines and Taiwan, where contract manufacturing rules the roost. Addressing bureaucratical issues would bring chip companies to India with investment and job opportunities close on the heels.

"Site selection is a very complicated process. Lots of factors are involved while selecting a site. Workforce, infrastructure and regulatory environment, both internal and external play an important role during the selection," said Intel’s spokesperson in India.