FABRICATION PLANT WAT EVERY INDIAN HAS TO KNOW

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WHAT IS A FABRICATION PLANT

A fabrication plant (or fab) is a term used to describe a factory where microchips, more popularly called chips on silicon wafers, are manufactured. These chips have packaged integrated circuits imprinted on them and are used in almost all electronic devices ranging from computers to cell phones and digital microwave ovens. Chips are made from silicon wafers, which is a thin, circular disk of extremely pure, crystalline silicon, typically six or eight inches in diameter. How much investment is required to put up one? Fabrication plants can cost billions of dollars of capital expenditures to create. It costs anywhere between $3-5bn to set up a fab.

What kind of companies invest in fabs? The best known are chip makers Intel and AMD who primarily make chips used in computers. Intel dominates the market chips which go into Pcs and laptops, and has a market share of around 85%. AMD is the only other biggish player with a 13% share. Companies like Texas Instruments, STMicroelectronics and Infineon invest in fabs which mainly make chips used in cellphones and other electronic devices such as PDAs. Other companies putting money in into fabs include Taiwanese company TSMC. Why does India not have a fab? Why is the govt so keen on one? One of the biggest hurdles in putting up a fab is the large initial investments needed. Further, electronics manufacturing requires the physical movement of hard goods and India’s roads are not well suited for this movement. Also, India does not have the kind of local component supply base that exists in, say, Hong Kong, Singapore and Taiwan, which have emerged as world leaders in semiconductor manufacturing.


What kind of fab is coming up now? The fab planned by a consortium represented by SemIndia will make chips using technology licensed from Advanced Micro Devices(AMD). Who all are investing in this fab and what are the details of its schedule? The fab is being set up with an investment of $3bn. AMD chief Hector Ruiz has signed an MoU with the Indian Government and SemIndia, a consortium of NRIs, for setting up the fab. AMD may pick up equity in the project in payment for its licensed technologies, although the investment details, equity holdings, the exact location of the wafer fab and its timetable are yet to be worked out. How will this fab help the manufacturing industry in electronics industry in India? A fab requires a fair amount of investment in infrastructure — roads, water supply, customs and airport. A fab is considered as the core of an electronic manufacturing chain and attracts other industries around it. Indian government has been pushing for a fab plant as it would help in building a complete manufacturing supply chain in the country. India has lagged behind China in the electronic manufacturing space and the government thinks a fab will help in pushing this.