VC wants to reboot Indian wafer fab plans
The initiative, with the Next Orbit Ventures Fund II to back it, could provide the missing element that has prevented previous plans from producing results – cash. The initiative comes at the same time that the unsuccessful Indian government efforts to attract chip companies to put down wafer fabs in the sub-continent are to be ramped up, according to a report in The Hindu.
The Indian newspaper reports that Minister for Electronics and IT, Ravi Shankar Prasad, has instructed the IT Secretary Ajay Prakash Sawhney to work on a “war footing” with the aim of creating a semiconductor fab in India.
However, there are risks that Next Orbit Ventures could run into the same bureaucratic quagmire that bedevilled previous efforts. Regional governments have been slow to provide answers to questions on such things as the provision of land, water, electricity and financial subsidies.
What is known is that the Next Orbit Ventures Fund II will lead investment into digital, analog and solar Fab with complementary investments in design and electronic manufacturing services companies and downstream investments in electronic equipment products to make use of the chips produced. NOVF II is described as a “daughter fund” under an Indian government electronics development fund scheme and when first announced in 2015 had a target size of $750 million.
However, Ajay Jalan, founder and managing partner of Next Orbit Ventures, has been quoted saying that the budget for the three wafer fabs – analog, digital and solar – would be about $10 billion in total.
Next Orbit Ventures was asked to submit its proposal to the Ministry of Electronics and Information Technology (MeitY) at the end of December 2016 and has signed memoranda of understanding with the state governments of Andhra Pradesh and Gujurat.
It remains unclear whether Next Orbit Ventures can resuscitate existing plans for wafer fabs or will be starting afresh.
Next: Confident of cash
A LiveMint report states that Jalan is confident he can raise the money for the three fabs through a combination of equity funding, subsidies and financial support from the state government that hosts the wafer fab and from central government.
The Indian government has had plans for two consortia to build wafer fabs in India dating back to 2012. However, after years of inactivity anchor and funding partner Jai Prakash Associates pulled out of project that was lent credibility by the presence of IBM and Tower Semiconductors who would have provided IP and services in kind.
A second consortium included known as Hindustan Semiconductor Manufacturing Co. (HSMC) included STMicroelectronics NV and Silterra Malaysia Sdn Bhd as partners and that has been dogged by inactivity, apparently because of problems raising funds.
Cricket Semiconductor is a a third private-sector initiative that was focused on trying to create an analog and power semiconductor foundry in India with a location in Pithampur Industrial Park on the outskirts of the city of Indore, the largest city in the state of Madhya Pradesh. However, again funding problems have caused Cricket Semiconductor’s progress to stall (see Slow India may lose Cricket wafer fab).
The LiveMint report said that Next Orbit Ventures has made connections with technology partners for each of the proposed wafer fabs – with Advanced Micro Devices Inc. (AMD) for the digital fab, with Tower Semiconductor Ltd. for the analog fab, and with Germany-based Centrotherm Photovoltaics AG for the solar unit.
The business model of getting the local authorities that will benefit from employment and economic activity to pay a substantial part of the cost of creating a wafer fab is standard. And it is notable that Tower Semiconductor is already going down that path in China (see Tower confirms Chinese fab project).
Related links and articles:
News articles:
Slow India may lose Cricket wafer fab
Lead partner pulls out of India fab plan
Tower confirms Chinese fab project
Indian fabs, the free market and central planning
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