India, long the home of outsourcing, now wants to make its own Chips

May 27, 2013 by

Source: New York Times via Indian Economic Business News

The Government of India, home to many of the world’s leading software outsourcing companies, wants to replicate that success by creating a home grown industry for computer hardware. But unlike software, which requires little infrastructure, building electronics is a far more demanding business. Chip makers need vast quantities of clean water and reliable electricity. Computer and tablet assemblers depend on economies of scale and easy access to cheap parts, which China has spent many years building up. So the Indian government is trying a new approach. In October, it quietly began mandating that at least half of all laptops, computers, tablets and dot-matrix printers procured by government agencies come from domestic sources, according to Dr. Ajay Kumar, Joint Secretary of the Department of Electronics and Information Technology, which devised the policy. At the same time, it is potentially providing as much as $2.75 billion in incentives in front of chip makers to entice them to build India’s first semiconductor manufacturing plant, an important step in building a domestic hardware industry. According to Indian media reports, two consortiums have been in talks with the government to build microprocessor foundries. The first is led by the Jaypee Group, one of India’s largest construction companies, which built the country’s Formula One track in Uttar Pradesh. It has partnered with I.B.M., which will provide the technology. The second bid is from the Hindustan Semiconductor Manufacturing Corporation, an American company that, despite its name, does not manufacture any chips. It has partnered with the Geneva-based chip maker STMicroelectronics. Source: New York Times

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