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30 minute interview
Electronics & autos key markets for India’s first fab
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P June Min
Chairman
Intellect Inc |
Seoul-based Intellect has plans to build a $3.1 billion fab
facility in Hyderabad to cater to the consumer electronics and automotive sectors.
*Is the fab in Hyderabad going to make 12-inch wafers?
The facility will have two fab units for manufacturing 8-inch and 12-inch wafers
and the project will come up in two stages at an investment of $600 million
for phase-1 and $2.5 billion for the second phase.
*Why did you choose the city to set up a semiconductor
factory and where will you source raw materials from?
We got offers from West Bengal and Karnataka apart from AP. We have opted for
AP because of its quality manpower, infrastructure facilities and support from
the state government. The mega fab facility needs 35-MW of quality power supply
and 10,000 tons of water every day. We require about 18 different chemicals
and 23 different gases to manufacture chips and for most of them, we have to
depend upon imports. We set up our first fab in 1972 in the US and later expanded
to Japan, Korea, Taiwan and China. In 1985, when we set up a fab in Korea, the
infrastructure wasn’t there. We trained the manpower and built the infrastructure.
Five years ago, the situation was the same in China. Here too we built whatever
was required. We will have trained manpower and support infrastructure within
the next six months.
*When will commercial production start and what will be
the capacity?
We expect to sign an MoU with the AP government shortly and work will be completed
by 2005 and commercial production will take place by the third quarter of 2006.
The capacity will be 30,000 wafers per month. The first phase will make 8-inch
wafers and the state-of-the-art facility in the second phase will manufacture
12-inch wafers with a capacity of 20,000 per month. The chips will be used in
the consumer electronics, automotive, wireless, and PC manufacturing industries.
About 70 percent of our production will be consumed by these four sectors. The
facility will provide employment to more than 10,000 people.
*When will you reach break-even point and what would be
the projected business volume?
During the first three years, we have to bear every expense. From the fourth
year onwards, revenues are expected to start flowing and during the same period
the project may reach its break-even point. 200 percent returns are expected
after eight years. Our revenue sharing model comprises technology partners (30
pc), captive customers (30 pc), and shared foundry customers (40 pc). In the
first phase of operations, we expect a turnover of $300 million. We are talking
with companies such as LG, Moser Baer, Millennium Electronics, Samsung, and
Toyota that are potential customers. We also undertake jobs for companies such
as Motorola, which supplies chips to Hyundai. Our fabs will cater to the domestic
market to meet local demand for the next five years. Our products will be marketed
under the ISMC (India Semiconductor Manufacturing Co) brand name.
*Is India a significant player in the global semiconductor
scene?
Globally, semiconductors are a $240 billion market. According to Semiconductor
Industry Association (SIA), this industry is growing at 11 percent annually,
while Indian, Brazilian, Russian, and the Chinese markets are growing at 30
percent. The semiconductor market in India is at $1.2 billion and expected to
reach $3 billion in the next three years. As per projections, India’s semiconductor
industry will touch $30 billion within 12 years.
Srinivasa Rao Dasari
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