By Krishna Barot
The Gujarat government’s bid to establish itself as a semiconductor hub may have succeeded in attracting big-ticket investments but have thus far found few takers amongst the MSME sector. Industry insiders attribute this lack of enthusiasm amongst MSMEs to the stiff conditions set by the government which are proving to be a deterrent for small players.
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It may be mentioned that Gujarat has attracted sizeable investments amounting to almost Rs 1.26 lakh crore for the semiconductor industry from four big-ticket companies, including Tata Electronics, Micron and Kaynes and CG Power . Despite that, the lack of participation by MSMEs is being attributed to the substantial minimum investment threshold ranging from Rs 50 crores to Rs 20,000 crore, depending on the type of plant, required to enter the sector. As per the government policy, a minimum investment of Rs 50 crore is mandatory for setting up an OSAT (outsourced semiconductor assembly and test) plant and a modified assembly marking and packaging unit to Rs 20,000 crore for a semiconductor fabrication plant.
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The investment threshold, coupled with several other factors such as lack of incentivization for R&D makes the ecosystem a high-barrier one for cash-strapped MSMEs, according to industry observers.
Dr Pankaj Yadav, an Associate Professor at PDEU (Pandit Deendayal Energy University) and founder of private company SATs (Semiconductor Analysis and Testing Solutions) maintains that if semiconductor fabrication units limit themselves to manufacturing nanochips, MSMEs may not be able to establish a foothold in the sector, given the niche and highly specialized processes and technologies involved. For example, Tata Electronics is collaborating with Taiwan’s PSMC (Powerchip Semiconductor Manufacturing Corporation) to manufacture 28 nm chips. “If the ecosystem also promotes the production and manufacturing of microchips, which have widespread application across various electronic devices, it would bolster MSMEs wanting to scale up their operations,” Yadav stated.
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