BackFab will catapult India, the way IT outsourcing worked: Devendra Verma
Hindustan Semiconductor’s Devendra Verma on why a semiconductor plant is critical to India’s electronics sector
Premium(Verma says fabs will help reduce the country’s dependence on electronics imports and bring in foreign exchange too. )
Mumbai: Devendra Verma, chief executive and founder of Hindustan Semiconductor Manufacturing Corp., is excited that his company’s ambition of becoming one of the first companies to set up a semiconductor plant in India is finally taking shape—almost seven years after he first conceived it.
His plan is yet to be approved by the government, which, experts say, is a formality.
He has already signed agreements with infrastructure companies Larsen and Toubro Ltd (L&T) and Infrastructure Leasing and Financial Services Ltd (IL&FS) that will help him construct the so-called wafer fab ground-up and complete the first phase by 2016. In a telephone interview from the US, Verma explained why a semiconductor plant is critical to India’s electronics sector.
Edited excerpts:
It has been a long wait for your company. Did you ever feel like giving up?
I have not lost hope despite waiting for almost seven years to build the fab in India. This is a high knowledge industry and the government of India has taken the first step to build it. It will catapult India, the way IT outsourcing worked for the country. After setting up the fab, we can have products developed by India Inc.
In the last few years, India’s market has grown as has its manufacturing improved. The fab will help reduce the country’s dependence on electronics imports and bring in foreign exchange too.
What makes you say you will taste success this time around?
We have an excellent Silicon Valley team in place and the right manpower...The government sops (such as those available under the Modified Special Incentive Package Scheme, or M-Sips, and deduction for expenditure on research and development under the Income Tax Act) are the first step. We can always expect more, but are satisfied with the incentives provided so far. The 10-year tax holiday provided by the government provides our partners with added incentive to do business in the country.
Why did you choose French-Italian electronics and semiconductor manufacturer STMicroelectronics (STM), and Malaysia-based wafer manufacturer Silterra as your technology partners?
STM has the right technology and a big portfolio of products that sell in India. Hence, we chose the company. If you don’t have a readymade product, a company could take 12-18 months to build one and that means a potential revenue loss of $400-500 million annually. Similar is the case with Silterra, which has a lot of experience in semiconductors.
Besides, both STM and Silterra have worked closely with each other, so it made sense to have a partnership with both. They are equal partners in the fab project.
What about L&T and IL&FS?
We will set up a greenfield project for which we will require 30-odd permits from different departments. It’s not our expertise, and neither do we have the experience here. Hence, we roped in L&T and IL&FS to help us build the Fab City on the lines of China, Taiwan, Singapore and Malaysia. Once all the approvals are in place, we hope to complete the first phase in 22 months, and have sample products in the market.
And the manpower...
Werner Reczek, our chief operating officer (COO), will be moving to India. He has more than 25 years of experience in the semiconductor industry, including technology development, product design, manufacturing, planning and management. He was previously vice-president of Infineon Technologies AG, where he managed the integration of a supplier for Infineon Technologies (IFX) in Shanghai. In 2005 and 2006, he successfully led the $1 billion wafer fab project in Kulim, Malaysia (IFX Power Fab). Besides him, we have 20 other senior executives who will shift base as part of our commitment to the project.
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