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News Analysis
AMD-SemIndia’s $3 billion gamble
Shivani Shinde examines the ramifications of AMD and
SemIndia’s partnership to set up a fabrication unit in India to make processors.
AMD’s Chairman
Hector Ruiz |
To SemIndia and AMD’s plans of setting up an Indian fab,
Intel responded with an investment plan but unlike its rival, has not committed
to setting up a manufacturing plant in India. SemIndia and AMD’s project
is likely to start next year and it will take at least two to three years. The
public-private partnership is expected to cater to domestic and global demand
for semiconductor chips for cell phones, PCs and set-top boxes.
Analysts say that the Indian chip market is worth approximately $800 million
and is slated to grow in the coming years. Industry officials have said that
India has a chance of competing with China and Taiwan to get a share of the
global $220 billion chip market.
Many feel that AMD’s latest gambit will give Intel sleepless nights. If
nothing else, this should boost AMD’s domestic prospects.
Rajat Sharma, Industry Analyst, Frost and Sullivan says,
“This announcement confers the first-mover advantage on AMD in terms of
building a brand by showing its commitment to the Indian market. However, let
us not forget that Intel was the first to come in with an R&D centre. Their
strategies differ.”
Indian manufacturers are happy with the announcement but
they would wait and watch than comment on any impact that it may have on PC
prices. Devita Saraf, Executive Director, Zenith Computer feels that the announcement
is great for the hardware industry but adds that the plant is justified if Indian-made
chips are exported.
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Intel's riposte
During his latest visit to
India, Craig Barrett, Chairman, Intel Corporation, unveiled a multi-year
investment plan totalling more than $1 billion. This includes a made-for-India
PC. The low-cost PC would be a fully-functional device designed for Indian
conditions combining dust and moisture resistance with a rugged styling.
“We will grow our local
operations, boost venture capital investments and work closely with the
government, industry and educators to increase the impact of the country’s
information and communications technology (ICT) industry,” said Barrett.
Intel’s $1 billion-plus,
multi-year investment roadmap includes plans to invest $800 million over
the next five years in expanding business operations in India, boosting
the research and development effort as well as marketing, education and
community programmes.
Barrett announced the creation
of the $250 million Intel Capital India Technology Fund to stimulate local
technology innovation and growth. The focus will be on Indian hardware
and software companies.
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Sharma is of the view that having a centre in India makes
sense for AMD, “They do have global centres in countries like China but
having a hub in India means better serviceability to neighbouring markets such
as Pakistan and Bangladesh.”
So has India arrived on the manufacturing map? Experts feel that one should
not read too much into the announcement, since it is going to take at least
two to three years for the fab to come up. Besides, many companies have been
showing interest in the Indian manufacturing market.
Says Sharma, “Broadcom, a maker of communications chips,
has already shown interest in outsourcing manufacturing chips to India.”
Besides, compared to investments in China and Taiwan, India’s share is
low.
shivani@expresscomputeronline.com
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