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Business Plan for PolySilicon Fabrication

Unit

Sunil Pillai
Institute of Business Management &
Research, Ahmedabad
SP Electronics
Vision
To become the leader in the Field of Electronic
Component Manufacturing in India with a focus on Providing
End-to-End Solutions
Mission
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To Provide High End Value Added Services in
Fabrication & Testing of Semiconductor
Products.

To Provide a Complete Chain of Services
starting from Designing to Implementation &
testing
Semiconductor Design Value
Chain
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Sunil Pillai
Demand Forecasting
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Current Standing of the Sector
The semiconductor design market in India was estimated to be
at US$ 3.3 billion in 2006

Out of the top 25 semiconductor companies, 19 have their
operations in India, including the top 10 fabless design
companies of the world

Foreign semiconductor companies such as Texas Instruments,
Intel, Cypress, ST Microelectronics and Infineon accounted for
approximately 70 per cent of the semiconductor design industrys
total revenue in India in 2005
Sector Growth
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The semiconductor design sector in India is
expected to reach approximately US$ 14.4 billion
and US$ 43.1 billion by 2010 and 2015,
respectively.

From 2005 to 2015, this sector is expected to
register a CAGR of approximately 29.5 per cent

Market Forecast
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Market Revenue Break up
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Semiconductor Manufacturing
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Sector Landscape
No operational wafer fabs in the country

Semiconductor manufacturing is limited to only three
government companies
Bharat Electronics Limited,
Society for Integrated Circuit Technology and Applied
Research(SITAR)
Semi-Conductor Laboratory.

These PSUs manufacture not for commercial purpose but for
strategic reasons
SWOT: Oppurtunity
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Manufacturers of electronic devices in India have
been dependent on countries such as China,
Taiwan, Korea or Singapore to source their
semiconductor product requirements.

India will be importing approximately US$ 150
billion worth of semiconductors over the next 10
years.

Consultants Take
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The absence of major chip fabrication plants
presents an opportunity to the semiconductor
and EMS companies setting up their
operations in the country.

Three Plants with a Capex of US $3 Billion are
financially viable
- Frost & Sullivan
Semiconductor Manufacturing
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SP Electronics will have the Parent Company
headquartered at Infocity, Gandhinagar.

It will form a Subsidiary to Set up a Fabrication Plant
at Fab City Near Hyderabad at a cost of Rs.5,500
Crores.

The Design & Value added services would be
provided by the Operations Center at GIFT,
Gandhinagar
Corporate Headquarters
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SP Electronics will be based out of Infocity at
Gandhinagar.

Being located out of an Export oriented SEZ would
allow it to cater to Domestic demand.

It will be listed on BSE & NSE. We would bring out an
IPO of 200 Crores to meet the short term liquidity
concerns & to part finance the Operations Center

Electronic Technology Hardware
Park of India (ETHPI)
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The government of Andhra Pradesh has allocated
1050 acres of land on the outskirts of Hyderabad, at
Thukkuguda (Maheshwaram mandal, Ranga Reddy
district), for the development of Fab City.

Fab City is located near the new Rajiv Gandhi
International Airport, operational since 23 March
2008, and is also strategically positioned close to the
162km eight-lane outer-ring road and a metro-rail
transport system also being built.
Fab City Map: Ideal Location
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Resources & Infrastructure
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Water:
The state authorities have offered to supply 50
million gallons of water a day

Power:
A dedicated 600 MW power project for Fab City.
The electricity will be supplied at a cost of Rs.2.25
per unit.
Land Acquistion
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Land Allotment:
Will acquire 100 acres on a 88 years lease at a
nominal rate of Rs.1 per acre per year.

The government of Andhra Pradesh has also
offered other concessions including subsidized
electricity and water supply.

National Semiconductor Policy
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20 per cent of the capital expenditure of a
semiconductor manufacturing unit located inside of
Special Economic Zone (SEZ) will be carried by the
government for the first 10 years.

The threshold investment for a semiconductor
manufacturing (wafer fabs) plant will be approximately
US$ 575 million (Rs. 2500 Crs)
Financing
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The total cost of setting up the fabrication plant would be an
estimated Rs. 5,500 Crores distributed in 3 phases.

20% amount would be contributed by Government of India under
the NSP.

Rest of the capex (Rs. 4,400 Crores) would be contributed by
FDI in three phases.

All formalities for the same will be facilitated through the specially
set up Single Window Clearance system of RBI.
Contingency plans
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Alternate financing plans include listing on foreign
exchanges & raising money via ADRs.

Long term Debt & ECB would also be considered

Of 4,400 crores, 1,500 Crores would be raised
through equity & remaining through Debt.
Break Even Point Analysis
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The manufacturing plant would commence
operations in 2016.

It would break even within 12 years of operation as
per calculations made by Frost & Sullivan (based on
Industry analysis & Demand Forecast).

Will appoint SemIndia as Consultant to set up the
manufacturing plant

Market Segmenting
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Application Segment Market
The telecommunication segment is the largest
application
segment contributing to the semiconductor market. It
registered a market share of approximately 43 per
cent in
2006 and is expected to grow to 46 per cent by 2009.
Future Competitors
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Company Investment
(in US $ Mn)
Proposed Fabrication Facility
India Electronics Manufacturing
Corp. (IEMC)
3,000 12inch Fab
Hindustan Semiconductor
Manufacturing Co. (HSMC)
4,000-4,500 8inch Fab
Videocon Industries Ltd. 230 Design-cum-fabrication complex
near Kolkata
Nano-Tech Silicon India Pvt. Ltd.
(NSTI)
600 8inch Fab
Cypress Semiconductor Corp. 50 Solar Fab Center
Signet Solar, Inc. 2,000 Solar photovoltaic Manufacturing
Base
Moser Baer Pvt. Ltd. 250 Worlds largest thin Film solar fab
at Noida
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Fabricating the Future
Thank You
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