'We are leveraging telecom's huge potential in India'

With an objective to be self-reliant SemIndia has embarked on an
ambitious project to have "Made in India" chips by 2009. BV Naidu, managing
director, SemIndia Systems speaks to VOICE&DATA on the ground covered so far
and what makes telecom click for SemIndia.

Can you update us on the progress of the Fab City?

As of now the construction for the assembly-test-mark-pack (ATMP) facility
is going on in Hyderabad. This will be completed by April 2008, and will spread
over close to 25 acres of land. For the wafer fab, we are still awaiting
government guidelines. Following the guidelines, we shall be able to lay out a
concrete strategy for selection of partners. The financial closure is a main
challenge, which normally will take up to 6-10 months. So, we are hopeful that
chip manufacturing can start by 2009. The Fab City will have the ability to
contain 6-8 chip fab units. Currently, four solar fabs are coming up alongside
supporting infrastructure facilities like Gas companies.

Some critics are of the opinion that a chip fabrication facility
is not needed in India. What is your response?

The concept of a Fab City came up with the need for India to have a complete
ecosystem. We are excited to have what we call the 'Golden Triangle' with
Bangalore being the design hub with over seventy design companies; Chennai
emerging as the EMS destination with the presence of manufacturing units from
Flextroncs and Nokia; and Hyderabad with the Fab City emerging as the
semiconductor-manufacturing center. This will add to the prowess of India in the
global semiconductor platform. Look at Taiwan that leads with export revenue of
$32 bn, primarily because of the Hsinchu Park that houses 275 design companies
and contains thirteen fab units, all in one closely knit ecosystem. India has a
large domestic market potential, so even if we do 10% of what Taiwan is doing
from just one cluster, we can do very well. The time is ripe for the
semiconductor industry and market in India. I am very confident that in 4-5 year's
time, we will be on par with others.

SemIndia Systems has made a significant start with manufacturing
of telecom related equipment. Why did you choose the telecom vertical?

The company, SemIndia Systems, started operations last year with an idea to
create a demand for chips. We wanted to go after high volume manufacturing of
products that have good local demand. India's telecom growth has been
significant and with broadband as a focal point, we are focused on innovative
products like ADSL Modems, IPDSLAM, GPON, set-top box (STB), WiMax, Media
players, rural phones etc. We are indigenously designing, developing and
manufactured ADSL2+ Modems, and IPDSLAM. For WiMax, we are making both .16e and
.16d products. We aim to do 2.5 mn units by end of this year. SemIndia Systems
is already shipping products (ADSL modems) for revenues of $40 mn in FY '07,
and is expected to earn $150 mn in FY '08.

With so much of local demand, how is India trying to be more
self-reliant and less import oriented for these products?

Previously, in the absence of making products in India, we were importing
components and products from countries like Taiwan and China. As a result,
nobody would look at India for assembly testing and packaging. So, to motivate
chip vendors to consider India for ATMP services, SemIndia started a system to
promote this aspect of the semiconductor ecosystem. We hope to be the first ones
to come up with the ATMP facility.

Do you have only the local market in mind?

Currently we are focused on the local market as we see immense potential of
broadband and WiMax penetration. As we are a start-up, the local market presents
us an immediate opportunity. However, we are keen to explore markets outside
India as well, like Brazil and Italy, for modems. In India, we are the OEMs for
system integrators like UT Starcom providing ADSL equipment for BSNL. We also
plan to come out with our branded products in 2-3 months. We are the only Indian
company to have in-house design and high-volume manufacturing capability for
such products.

How do you intend to beat the Chinese products?

The level of innovation we are churning out is entirely keeping in mind the
Indian market. For example, instead of linear power supply, we are supplying
switched mode power supply to take care of power fluctuation from 90 volts to
300 volts. This makes our product functional in rural India. We also have the
ability to bring down the cost of the product, as we have high-volume
manufacturing capability. We produce 12k units of ADSL a day. In September this
year, we shall be releasing 64-port pizza box-type IP DSLAM.

Malovikar Rao


malovika@cybermedia.co.in