“The most important thing is that chips designed in India are made in India”

EDN Asia: Presently, there are more than 120 chip design companies in India. Would the setting up of the SemIndia fab here offer wide-ranging benefits to the design industry and change the chip design scenario in India?

Agarwal: The more than 100 chip design companies in India will definitely benefit from a fab industry in the country since they will be able to offer a more complete product and at a faster pace to their end customers. Chip design companies in India today have to work with chip manufacturing and testing companies in Singapore, Taiwan and China, and system designers in the US and other countries to ensure that the designed chips are perfect. This takes an inordinate amount of time and can sometimes delay the introduction of the new product to the market. With fabs in India, most of these time and cost issues would disappear, and this would in turn attract more design companies to India.

EDN Asia: You have said that India has tremendous potential in chip manufacturing as the consumption of electronics is expected to reach $300 billion by 2015. Please comment.

Agarwal: This is based on a detailed report by market research firm, Frost and Sullivan, which was commissioned by India Semiconductor Association. It points out how, based on the current consumption of electronics in India and the 23% growth rate, total consumption annually by 2015 would be over $300 billion. Interestingly, even then, India’s consumption would be less than that of China today.

EDN Asia: When Fab City comes into operation, $40 billion worth of chips would be manufactured. What are the cost benefits to the industry, consumers and the country?

Agarwal: First of all, when the total consumption of semiconductors in India hits the $40 billion range, only a fraction of it will be produced in India. Hopefully by then, the country would also be a huge export player with Indian-made chips and electronics being exported. The most important thing is that chips designed in India are made in India. Electronics products made in India from these chips will definitely be price competitive globally since the entire eco system will be in one location. For the domestic market, it will reduce the transportation and other supply chain management costs. It will also create local suppliers for many other components such as plastics, printed circuit boards, display panels, solar panels, and batteries, all of which will contribute to a price reduction and more innovative products for the Indian consumer as well as the global consumer.


EDN Asia: The commissioning of Semindia fab will create competition for other companies to set up fabs in India. SemIndia is closely followed by HSMC and IEMC with their new semiconductor foundry project proposals. Any comment on this?

Agarwal: It is wonderful to see that multiple companies are already targeting the Indian market for chip manufacturing. The entire eco system for the fab industry is effective only when it is substantially large and includes multiple fabs.

EDN Asia: The fabs in China and Taiwan have full government support. Do you think that the key factor in India's quest to build fabs is government support?

Agarwal: The government of India has recently announced a very comprehensive policy that is comparable to governmental support from other countries such as Germany, Israel and the US. This is a very significant step and would help accelerate the movement of chip manufacturing to India. SemIndia recognized from day one that without such a policy from the government of India, chip manufacturing in India would not be a viable business proposition. This policy is now in the process of being implemented.

EDN Asia: Nearly 15% of the skilled technicians working in the Asia Pacific semiconductor industry, estimated to be between 4,500 and 5,000, are from India. Could the growth of the country’s semiconductor industry attract them to return?

Agarwal: Absolutely! This is clearly one of the advantages that India can benefit from; thousands of semiconductor manufacturing experts from India will be attracted to return to participate in the growth of this industry. A similar phenomenon is taking place in the software industry and chip design industry. Also, with the decrease in the number of semiconductor manufacturing jobs in the US, there is a huge interest from semiconductor experts from the US to be a part of SemIndia. This is a very positive step.

EDN Asia: How will a fully functional fabrication facility impact the job market in India?

Agarwal: A Frost and Sullivan report has projected that the entire chip design and manufacturing, and electronics design and manufacturing, and the rest of the eco system associated with it will create more than 8 million direct and indirect jobs in India by 2015.

EDN Asia: Is the delay on the part of the state government is adding to the overall cost of this project.

Agarwal: At this point, the state government has been moving along with the interested fab companies and not leading to any delays. There is a lot of work to be done as the complete infrastructure is being developed, but the expectation is that all the systems are on the go.

EDN Asia: Should the Indian government learn from China and Taiwan where, with full government support, their industries were able to capture the world market?

Agarwal: The Indian government has already created the right policy framework for semiconductor manufacturing. This, together with the SEZ benefits and the Fab City benefits by the government of Andhra Pradesh, India is now at the forefront of attracting the fab industry. Once the infrastructure is complete, we expect to see a huge interest from multiple players across the world to come to India for chip manufacturing. SemIndia is certainly proud to have started this process and look forward to being the first high volume, high-end fab in India.

Biography of Dr. Vinod Agarwal
Dr. Agarwal founded LogicVision in 1992, and was President and CEO until 2003, and Chairman until 2005. Innovations pioneered by Dr. Agarwal and his team at LogicVision has resulted in over 100 filed and granted patents worldwide. SiliconIndia honored him as “Entrepreneur of the Year” in 2002. Dr. Agarwal is Chief Advisor to India Semiconductor Association, and President and Chief Executive Officer of SemIndia.