Industry leaders this week again came together to engage in what has become an almost annual debate -- will a fabrication plant in India help the sector or not?

"As far as a fabrication plant is concerned I have my own doubts," said J. A. Chowdary, president and chief executive of Pinexe Systems, a semiconductor firm.

"No government is interested in investing a huge amount in such a facility. There is no hope here. But as far as electronic components are concerned there is an opportunity," Chowdary told delegates at Tuesday's conference in Bangalore.

He said India should focus its energies on contract manufacturing for the electronics industry which, according to industry analysts, is projected to earn revenues of 9.7 billion dollars next year.

India holds a meagre 0.1 percent of the global semiconductor industry worth 300 billion dollars. In comparison, Taiwan's share of the industry grew from 440 million dollars in 1990 to 16 billion dollars in 2000.

Taiwan produces about 80 percent of global semiconductor chips and boasts the world's leading made-to-order microchip maker, Taiwan Semiconductor Manufacturing Co, founded in 1987.

The company makes about 4.3 million wafers and for the nine months to September its net profit rose to 70.13 billion dollars from 31.26 billion dollars in the same period the previous year.

Rajat Gupta, chief of Beceem Communications, a chip designing firm, argued India must not give up its dream of having a foundry.

"I do not see any reason why we do not have one," Gupta said. "One has to innovate to raise funds for this. We have got to believe that we can do it. The mindset has to change."

Raja Manickam, chief executive officer of Tessolve, which provides services for semiconductor testing and hardware design, said about 125 firms in India are doing semiconductor work ranging from electronic design automation and testing to developing software.

More than 70 of these are based in the technology hub of Bangalore.

"Anything to do with intensive engineering should be ours," Manickam said. "The semiconductor manufacturing industry is worth 240 billion dollars and a fabrication plant in India will unlock the entire semiconductor supply chain.

"We have the talent and we need to pitch this with a lot of investors in the United States," he said.

But Bobby Mitra, managing director of Texas Instruments, disagreed.

"India's infrastructure does not allow production of chips," Mitra said. "India is also not doing too well in terms of chip design as there is talent but not too much experience."

A week ago, 31 local and foreign companies launched the India Semiconductor Association to raise the global profile of India's sector.

Siddhartha Das, strategic initiative director of Intel Capital based in Bangalore said India was losing its focus in the semiconductor industry as it was "jack of all trades and master of none."

"The payoff will only come when there is a certain level of investment and risk. In India our minds are torn between software and hardware. There is a dichotomy. True success comes from both," he said.

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