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Posted: February 18, 2008

India's Fab City investment to top $7 billion as focus moves to solar

(Nanowerk News) The Indian government has approved an additional five companies to take part in projects in Fab City, a proposed semiconductor manufacturing location near Hyderabad. This would take the total investment in Fab City to $7 billion, Minister of State for Commerce, Jairam Ramesh said on Monday (Feb. 18), speaking at the two-day India Semiconductor Association summit.
The focus of the latest investments is on solar energy conversion he said but added that the Indian government has many further projects either with in-principle approval or under considerations which could bring further investments to Fab City.
Fab City, set up in 2006 to encourage the genesis of chip manufacturing in India, is now betting big on photovoltaic products. The five latest projects are all focused on the solar energy business and about half of the proposed projects for Fab City are now in the photovoltaic area.
The five projects are the India-based Titan Energy Systems Ltd. proposing an investment of $50 million in solar photovoltaic cells; NanoTech Silicon India with an investment of $2.1 billion to manufacture thin film solar cell fab; India-based XL Telecom & Energy Ltd., which is investing $76.25 million to set up a unit for solar cells and solar modules; KSK Energy Ventures Ltd. (Hyderabad, India) a venture capital fund that plans to set up a unit for solar photovoltaic panels with an investment of $70.25 million; and the Indian subsidiary of the Canada-based Embedded IT Solutions is planning to set up a PCB manufacturing project with an investment of $5 million.
Two earlier Fab City announcements were the $3 billion SemIndia project to create a world-class wafer fab and the Hyderabad-based Solar Semiconductor Ltd. which said it would be investing $1.1 billion over a 10-year period. The first phase is set to cover manufacture of solar cells and solar panels. The second phase is set to focus on solar thin film technology while the third would scale up manufacturing capacity to one gigawatt per annum.
The Indian government has also given an in-principle approval to five other projects worth a further investment of $7 billion. Yet another five proposals, also worth between $6 billion and $7 billion are under active consideration, Ramesh said during the opening of the ISA summit.
In-principle allotments have been given to five other Indian companies: Chandradeep Solar for an R&D unit, Neotech Solutions, Photon Energy Systems, Surana Ventures and RamTerra Solar Pvt. Ltd. for several photovoltaic modules unit.
Among other companies that are under consideration but which are yet to finalize their location are the Indian consumer electronics giant, Videocon which is looking at an investment of $250 million and Hindustan Semiconductor Manufacturing Company (HSMC), which has partnered with Infineon Technologies AG (Munich, Germany) to set up a semiconductor manufacturing plant.
The proposed investment of $1 billion for the HSMC unit would focus on chipsets for mobile phones, direct to home TV set top boxes, automotive and smart cards, The company has yet to finalize the location where it will build a wafer fab.
Among other companies with an interest in Fab City is Moser Baer, a maker of optical storage devices that has joined forces with Allied Materials Inc. for photovoltaic cells and has set up a manufacturing unit at Sriperumbudur on the outskirts of the southern port city of Chennai. Given the momentum behind semiconductor manufacturing Air Liquide of France has proposed a facility for the supply of gases and chemicals while BOC announced plans to set up a chemical plant in Hyderabad last year.
"Setting up a plant for a wrong reason, say just because the money is available, will not work," said Malcolm Penn, CEO of analysis firm Future Horizons (Sevenoaks, England). He said some of the proposals would work out and some would not. "You have to set up a plant for the right reasons have a workable business plan in place and check out all the challenges in terms of manpower, infrastructure and the market. It should not be merely a sweatshop  set here today because it is cheaper to do it here and then move on  but a plant fully integrated into your system." he added.
Source: EE Times Europe (Sufia Tippu)
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