Indian Fabs, the Free Market and Central Planning

There are currently plans to construct three semiconductor wafer fabs in India. Two of the fabs are meant to be built at the behest of the Indian government but with private consortia as the actuators, while one is a free market initiative being put together by a couple of experienced semiconductor industry executives.

And now, afters years of bureaucratic sclerosis and in activity one of the state organized consortia has started to break up with the pull out of anchor partner Jai Prakash Associates, which was also meant to be the money bags for the project to which IBM and Tower Semiconductors would provide IP and services in kind.

There is no similar bad news around the second government-sponsored consortium focused around Hindustan Semiconductor Manufacturing Co. (HSMC). But similarly there is no positive news, just apparent 

It seems that the construction of two fabs at an estimated cost of $5 billion has been a series of line items in India government papers for four years but little more than that; with an expectation that bureaucratic words are equivalent to financial subsidy and that this alone would be enough to make real funds materialize.

In contrast, there is Cricket Semiconductor, a company set up with the purpose of building and operating $1 billion analog and power semiconductor wafer fab in India by two former Texas Instruments executives who formed the company. It takes money of course but Cricket's plan is to break ground in 2016 and begin producing chips for customers in 2018.

Right now the free market, driven by the prospect of profit, would seem to have the advantage over central planning driven by societal considerations and a propensity for wishful thinking. But the proof of the pudding will be in the sales of wafers.

This article was originally published by  EE Times Europe.

Peter Clarkecovers business news and analogfor EE Times Europe.

Related links and articles:

Lead partner pulls out of India fab plan

Indian fab project hires former GloFo exec

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