Around the time the Centre had kicked off its maiden fab city project in 2006, a group of Silicon Valley-based Indian expatriates started Hindustan Semiconductor Manufacturing Company (HSMC), keen not to miss out on the opportunity.
Backed by years of experience in semiconductor design, prototyping and product validation, the company, headed by Devendra Verma, proposed starting a fabrication unit in India, in partnership with chip-maker Infineon. However, just before its discussions with the government took a concrete shape, things changed — companies that had claimed to be serious candidates for the fab project started retreating, as the government’s policy on subsidy to fab investments wasn’t well-defined. The global economic crisis that followed the collapse of Lehman Brothers in the US in September 2008 also spoiled the party.
However, HSMC continued its journey, forging new partnerships and preparing a blueprint of the project it wanted to pursue. In 2011, when the government invited applications for fab units, it participated in the process. But this time, it chose STMicroelectronics and Malaysian wafer manufacturer Silterra as its partners for the ambitious project, which entailed an investment of Rs 25,000 crore. With the Cabinet giving its in-principal approval to two proposals last week, including that of HSMC, the company is now preparing for a hectic phase of activity.
The other proposal approved involves a consortium comprising India’s Jaiprakash Associates, International Business Machines and Israel’s Tower Jazz. While the investment in the Jaypee-led unit stands at Rs 26,300 crore, the HSMC one entails Rs 25,250 crore of investment.
“We are quite happy that our background work in the last six-seven years has finally paid off; we remained persistent; we stayed on track. We are now waiting for a formal (approval) letter from the government. We have already readied a complete model and a plan. We have been in discussions with all investment groups and technology partners,” Verma told Business Standard in an exclusive interview.
A technology entrepreneur and venture capitalist who has invested in about 80 companies in the US and in India, Verma says HSMC didn’t give up after the failure in 2007. Now, after the Cabinet has given a green signal, the company’s core team, including co-founder Rajvir Singh and chief operating officer Werner Reczek, is preparing to head for India, says Verma, a doctorate in space technology who was involved in building Insat-1, India’s first communication satellite series, during his stint at Loral Corporation.
“The key point is together, we have a team of NRIs (non-resident Indians) who have built companies in the US and in India in the last five years. So, we are better placed in building an international company with bases in India, as well as in the US,” Verma said. “For making HSMC successful, that is one of the key requirements.”
HSMC plans to set up a chip fabrication unit that can manufacture 40,000 12-inch wafers a month, addressing the high-volume segment. In the first phase, the plant would be able to produce 20,000 wafers a month.
Rajvir Singh said HSMC wouldn’t consider bleeding-end technologies; it would focus on the centre band where the production volume was high — 40-50 per cent of chips fall in this range. “HSMC will go for a different complexity and volume because we are in the merchant semiconductor business…We have to produce chips for the local market and also for international markets so that the fab remains full-grown.”
Verma says HSMC’s model would aid the growth of the semiconductor ecosystem in India. “HSMC’s model will enable Indian fab companies to come up. Our goal is to produce next-generation chip companies such as Marvell and Broadcom out of India.”
HSMC is selecting equity partners for the fab project and identifying a location for the plant. The Gujarat government has proposed the company set up the plant in a plot 25-30 km from the Ahmedabad airport. The governments of Andhra Pradesh, Maharashtra and Karnataka, too, are keen that the project be based in their respective states. “We have not yet taken the final decision. But we do have many options and all the options are quite good,” Verma said.
However, this time, too, a cloud hangs over the fate of the project, as more companies could step into the space. While giving its ‘in-principle’ approval to subsidise the two proposed fab consortiums, the Cabinet had asked the Department of Electronics and Information Technology to actively seek more proposals in the next four weeks.