Lead partner pulls out of India fab plan

April 21, 2016 // By Peter Clarke
Indian flag
After years of inactivity the Indian government's long-running project to build two wafer fabs in the sub-continent appears to be in jeopardy, at least on one front.

Local cement and infrastructure company Jaiprakash Associates – which was the anchor partner in a consortium with IBM and Tower Semiconductor Ltd. to build a wafer fab in Greater Noida in Uttar Pradesh – has pulled out of the project, according to local reports.

"JP Associates has withdrawn its proposal of semiconductor plant. They have said that it is not commercially viable to set up this plant at present," Aruna Sharma, secretary of the DeitY (Department of Electronics and IT) of the ministry of communications & information technology, government of India told reporters on sidelines of a Qualcomm event in New Delhi.

Estimates of the spend on the fab vary from 263 billion rupees (about $4 billion up to 340 billion rupees (about $5 billion) but are somewhat moot as the premise of the projects was that the government would provide funding to subsidize the consortium's plans. Jaypakash Associates was reported to have high levels of endebtedness.

A spokesperson for Tower Semiconductor Ltd. (Migdal Haemek, Israel) confirmed JP's withdrawal in a email response to eeNews Europe.

"Indeed JP has withdrawn their part of out consortium. They had the role of investing money in this project. At this point, we are looking for other investors who may have interest in joining this deal," the spokesperson said. "Nevertheless, [you] need to remember that this deal was never part of our business plan, nor in any of our analysts' models."

The slowness of the Indian government, its lack of ability to raise funds, seem to have blighted both wafer fabs.

Jaiprakash Associates and Hindustan Semiconductor Manufacturing Co. (HSMC) were the two consortia approved by government of India to construct wafer fabs back in 2012 (see Tower aims to build 300-mm wafer fab in India ). The Indian government's thinking was that its negative balance of trade in chips needed to be addressed and it was not sufficient to only try and compensate for