Chip firm HSMC goes to govt with plea on market commitment

Semiconductor firm HSMC has approached the government seeking market commitment to set up a high-technology electronic chip plant that entails investment of around Rs 29,000 crore.
"HSMC has been working with potential investors. However, investors want to see a reliable market size for which we have approached the government," HSMC Chairman Deven Verma told PTI in an interview.
Hindustan Semiconductor Manufacturing Corporation (HSMC) is the only electronic chip firm that is working with the government to set up India's first semiconductor plant. It has tied up with STMicroelectronics and Silterra Malaysia to set up the facility.
The government had also approved the JP Associates-led consortium to set up one more plant, but the group backed out in the absence of an appropriate market.

The Cabinet had initially cleared setting up of the two semiconductor plants in September 2013. A global tender was issued to invite interest from other semiconductor firms to set up plant in India. The government had promised same incentives as the two electronic chip plants, but no company turned up.
Chips constitute a major cost of smart devices and are considered as drivers of modern electronic products like mobile phones, camera, automotive and defence electronic products and the like.

The government has given HSMC time to submit its investment road map with firm financial commitments.
"The government is giving subsidy to electronic companies and those companies' procurements should be channelised such that they procure India-made products. This will also help implementation of 'The Make in India' programme. Once we get India market commitment, it will become viable to make chips in India," Verma said.

The government, he said, already has policies like preferential market access (PMA) in place that needs to be implemented sincerely for cyber security of the country.
Under the PMA policy, products procured by the government and which have security implications are required to source some critical components that are made indigenously.
"The government is giving subsidy to electronic companies. It is public money which has to be channelised in a manner that those who benefit or are subsidised by it are made to procure components that are made in India. Once we get such market, it will become viable to make chips in India," Verma added.

According to him, China is making strategic efforts to become a world leader in the semiconductor space.
"As per public domain information, China has earmarked about USD 100 billion for the semiconductor industry. Chinese companies are acquiring US semiconductor companies, which has set off alarm bells in the US. India needs to take note of such development which almost imports 100 per cent of chip used in electronic products," Verma pointed out.
Further, he said, it is not an easy task to implement such a difficult project and no new semiconductor wafer fabrication plant is coming up in the world except in China with very strong government support.

He hinted that some foundries may be extending their production capacity. He cited the instance of Intel that has announced setting up an additional fabrication plant in Arizona.
"Keeping in view the national interest, the government should ensure... These semi-chips are manufactured in India by an Indian fabrication unit," Verma suggested.
He said HSMC should be seen as developing India's first fabrication plant where the government is also a stakeholder.