SP Electronics

8/9/2019 SP Electronics

1/23

Business Plan for PolySilicon Fabrication Unit

Sunil Pillai

Institute of Business Management & Research,Ahmedabad

SP Electronics


2/23

Vision

To become the leader in the Field of Electronic

Component Manufacturing in India with a focus on Providing

End-to-End Solutions

Mission

SP Electronics2 Sunil Pillai

To Provide High End Value Added Services in Fabrication &

T

esting of Semiconductor Products.

To Provide a Complete Chain of Services starting from

Designing to Implementation & testing


3/23

Semiconductor Design Value Chain



4/23

Demand Forecasting

SP ElectronicsSunil Pillai4

y Current Standing of the Sector

y The semiconductor design market in India was estimated to be at US$

3.3 billion in 2006

y Out of the top 25 semiconductor companies, 19 have their operations in

India, including the top 10 fabless design companies of the world

y Foreign semiconductor companies such asTexas Instruments, Intel,

Cypress, ST Microelectronics and Infineon accounted for approximately

70 per cent of the semiconductor design industrys total revenue in India

in 2005


5/23

Sector Growth


y 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.

y From 2005 to 2015, this sector is expected to register a

CAGR of approximately 29.5 per cent


6/23

Market Forecast



7/23

Market Revenue Break up



8/23

Semiconductor Manufacturing


Sector Landscape

y No operational wafer fabs in the country

y Semiconductor manufacturing is limited to only three government

companies

y Bharat Electronics Limited,

y Society for Integrated CircuitTechnology and Applied Research(SITAR)

y Semi-Conductor Laboratory.

y These PSUs manufacture not for commercial purposebut for strategic

reasons


9/23

SWOT: Oppurtunity


y Manufacturers of electronic devices in India have been

dependent on countries such as China,Taiwan, Korea or

Singapore to source their semiconductor product

requirements.

y India will be importing approximately US$ 150 billion

worth of semiconductors over the next 10 years.


10/23

Consultants Take


y The absence of major chip fabrication plants

presents an opportunity to the semiconductor and

EMS companies setting up their operations in the

country.

y Three Plants with a Capex ofUS $3 Billion are

financially viable

- Frost & Sullivan


11/23

Semiconductor Manufacturing


y SP Electronics will have the Parent Company headquartered at

Infocity, Gandhinagar.

y It will form a Subsidiary to Set up a Fabrication Plant at Fab City

Near Hyderabad at a cost of Rs.5,500 Crores.

y The Design & Value added services would be provided by the

Operations Center at GIFT, Gandhinagar


12/23

Corporate Headquarters


y SP Electronics will be based out of Infocity at Gandhinagar.

y

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

y

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

finance the Operations Center


13/23

Electronic Technology Hardware Park of

India (ETHPI)


y The government of Andhra Pradesh has allocated 1050 acres of

land on the outskirts of Hyderabad, atThukkuguda (Maheshwaram

mandal, Ranga Reddy district), for the development of Fab City.

y Fab City is located near the new Rajiv Gandhi International

Airport, operational since 23 March 2008, and is also strategicallypositioned close to the 162km eight-lane outer-ring road and a

metro-rail transport system also being built.


14/23

Fab City Map: Ideal Location



15/23

Resources & Infrastructure


y Water:

y The state authorities have offered to supply 50 million

gallons of water a day

y Power:

y A dedicated 600 MW power project for Fab City.The

electricity will be supplied at a cost ofRs.2.25 per unit.


16/23

Land Acquistion


y Land Allotment:

yWill acquire 100 acres on a 88 years lease at a nominal rate

ofRs.1 per acre per year.

y The government of Andhra Pradesh has also offered other

concessions including subsidized electricity and water supply.


17/23

National Semiconductor Policy


y 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.

y The threshold investment for a semiconductor manufacturing

(wafer fabs) plant will be approximatelyU

S$ 575 million (Rs.2500 Crs)


18/23

Financing


y The total cost of setting up the fabrication plant would be an

estimated Rs. 5,500 Crores distributed in 3 phases.

y 20% amount would be contributed by Government of India under

the NSP.

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

in three phases.

y All formalities for the same will be facilitated through the specially

set up Single Window Clearance system of RBI.


19/23

Contingency plans


y Alternate financing plans include listing on foreign exchanges

& raising money via ADRs.

y Long term Debt & ECB would also be considered

y Of 4,400 crores, 1,500 Crores would be raised through

equity & remaining through Debt.


20/23

Break Even Point Analysis


y The manufacturing plant would commence operations in

2016.

y It would break even within 12 years of operation.

y Will appoint SemIndia as Consultant to set up the

manufacturing plant


21/23

Market Segmenting


pplication 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.


22/23

Future Competitors


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


23/23

SP ElectronicsFabricating the Future

Thank You


Documents

SP Electronics