Semiconductor Fab Unit in Mysuru: What’s in it for Mysuru-Nanjangud?
By S.G. Vombatkere
Karnataka’s State High-level Clearance Committee cleared establishment of Karnataka’s first semiconductor project (fab unit) at a cost of Rs.3.4K crore, in a 234-acre electronics manufacturing cluster near Mysuru. [Ref.1] It is reportedly based upon investment by Zoho-backed Silectric Semiconductor Manufacturing Pvt. Ltd. The fab unit is thus a government-investor joint venture.
Centre has invested Rs.126K crore for semiconductor fabrication projects in Gujarat and Assam, including “India’s first commercial fab unit” at Dholera, [Ref.2] at an estimated cost of Rs. 91K crore. It is a joint venture between Tata Electronics and Taiwan’s Powerchip Semiconductor Manufacturing Corp. In 3-4 years, it is to produce 50,000 wafers/month (with about 500 chips per wafer) using 65, 40 and 28-nanometer technology.
Business planning would include calculating the capital investment required for the planned scale of operations, which in turn depends upon expected markets for the product. Thus, in view of other investments for fab units in India and general information on semiconductor fabrication available, the production scale of a Rs.3.4K crore fab unit — a small fraction of the cost of the Dholera fab unit — may not be effectively competitive, especially when the cost of equipment is about 75% of factory capital costs. Being competitive in this ultra-high-tech field is necessary for business survival and safety of investment. Obviously, this being a very small unit may find it difficult to compete with other giants in Gujarat and Assam.
This is not to question the technical-financial competence of either Government of Karnataka planners or the investor, but to take an overview.
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