It is too late to devote resources to chip manufacturing. India, instead, should explore opportunities in solar energy, where entry barriers are low and end-products are sold like commodity, states a JP Morgan report. |
Authored by Bhavin Shah and Roland Shu, it argues the country should support its solar energy cell industry, as the climate is conducive, there is a high dependence on foreign oil, there is an opportunity for innovation in the solar cell process and very high domestic demand with relatively low capital requirements. |
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It has been long argued that setting up a semiconductor plant will create a semiconductor 'eco-system', which will help domestic companies move up the global value chain. The semiconductor ecosystem, which is currently dominated by design services and embedded software, will be in place by 2010 with the setting up of planned semiconductor manufacturing facilities, states a recent In-Stat report. |
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The authors of the JP Morgan report, however, wonder why India is considering a new one, just as the fund flows to foundries is dying down in Asia. "In a world of free trade and the WTO, we see no need for any country, let alone India, to fund new initiatives in this space. We expect no real returns from any government financial support for Indian semiconductor manufacturing," they state. |
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The foundry industry is an oligopoly, with the top-four foundries having over 70 per cent market share. Taiwan captures 65 per cent of the worldwide foundry revenues and countries such as China and India will find it very difficult to compete with it. |
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The observation comes at a time when the Indian Semiconductor Association (ISA) Vision Summit 2007 will hold a two-day event in Hyderabad, beginning February 5. The ISA maintains the Indian semiconductor design industry had a turnover of $3.2 billion in 2005 and is expected to grow to $43 billion by 2015. |
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