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Tuesday, March 20, 2007

From design to fabrication

As analysts debate India’s chances of hosting a fab, a look at what goes into setting up a state-of-the-art unit

A new chip game is on cards. Having made it big on the global semiconductor design map, this could be India’s last chance to host a fabrication base. Even as analysts await the fine print of the much talked about semiconductor policy, talks of $10 billion investments are already doing rounds.

Early signs are encouraging. While SemIndia has already announced its $3 billion plans, Nano-Tech Silicon India, NeST and Hindustan Semiconductor Manufacturing have also expressed their desire to set up a fab. Many more might be in the offing. “ISA is getting enquiries from countries like Singapore and Japan for greater details on the policy…But it would be very difficult to comment when these units will actually start functioning. Global players will take a call on investing in India only after seeing the policy documents,” says Poornima Shenoy, president, Indian Semiconductor Association (ISA).

Though there is no final word yet on our readiness for state-of-the-art fabrications, a closer look at the current infrastructure status gives vital clues. The first and the foremost thing a fab needs is adequate capital. A basic 300-nanometer fab requires a minimum investment of $3 billion. This could go up to $5 billion for a relatively modern 130-nanometre (nm) fab. Going by the initial interest shown by multinational chip majors, insiders are confident of attracting enough capital.

“State-of-the-art fabs are estimated to cost anywhere between $3.5-5 billion. However, these produce cutting edge technology devices. Fabs that are a notch below will be available for a fraction of these costs,” says Sunil Shenoy, senior manager, Ernst & Young.

According to the ISA, a fully functional fabrication facility requires about 2,000 employees. Of these, 55% should be technical (diploma holders), 35% professional, and the rest 10% administrative. Above that, nearly 500 indirect employees are required on site to provide security, maintenance and amenities like cafeteria.

India’s traditional advantage of lower labour costs are offset by the fact that new fabs are capital-intensive and do not really need a huge manpower. All they require is top quality PhDs. And this is where countries like Israel and US get an edge over India with their world-class universities. A recent ISA-Ernst & Young study reveals that in order to maintain its lead in the semiconductor design industry, India needs to improve the quality of its talent and technical education. “Nearly 15% of the skilled technicians are working in the Asia Pacific semiconductor industry that is from India. They are estimated to be about 4,500-5,000 people. The growth of the semiconductor industry in India could help attract them back,” says Shenoy.

Fabs also need stable power to the tune of nano-seconds (billionth of a second) and millions of gallons of clean water. While electric requirements can go up to 40 mega watt, a 1,75,000-sq ft clean room (an area where the environment is controlled to eliminate all dust) will need two million gallons of water a day. “The mega fab facility needs uninterrupted power and water supply and waste efficient management system. Constant high-quality power and water supply is critical as even the smallest production downtime could result in substantial losses,” says Ganesh Guruswamy, country manager, Freescale Semiconductor India.

Likewise, solid waste generation like concrete, metal, wood, plastic and glass is about 4,000 tonne a year for a fully ramped fab facility. During construction efforts, solid waste can be expected to reach 15,000 tonne a year. As regards fuel requirements, a fab needs about 200 gallons of diesel to power emergency back up generators. It also needs a specifically designated room to house the many gases required in fab processing. Acreage required for a single fab could be anywhere between 150 to 200 acres, and 600 to 800 acres for a multi fab campus, which allows for additional growth planning.

Despite the huge domestic market, fabs need to be export-oriented too. “The silicon business, apart from the high technology obsolescence, is very cyclical, so the entire investment has to be recovered in the upswing. The domestic market, though growing, doesn’t justify the scales, therefore exports are imperative,” says MAIT executive director Vinnie Mehta.

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