Indians Teaming Up With Israelis

Posted by: Bruce Einhorn on October 1, 2007

I’m on the record as a skeptic about Indian ambitions to build a semiconductor industry. As I’ve noted (see here, for instance) building even a chipmaking factory with lagging technology requires hundreds of millions of dollars. The price tag for a more advanced plant can easily top $3 billion. All that for an industry where only few companies manage to make money consistently. Yet companies in China – and now, India – want to spend the money anyway. Economics be damned. Real men build fabs.

Pushing hard is Hindustan Semiconductor Manufacturing Co. According to this story from EETimes HSMC is planning to build an 8-inch fab (i.e. one that uses more mature tech) for $1 billion, and another 12-inch fab (more advanced) “which will require another $3.2 to $3.5 billions of investment.” More interesting news about HSMC. According to EETimes, the company is in talks with Tower Semiconductor, a second-tier foundry from Israel. Of course Israel has a strong tech industry and plenty of talented engineers. Moreover, Intel makes chips there. Yet Tower has struggled for years in an industry that’s dominated by the Taiwanese. Teaming up with the Indians makes sense for the Israelis, and Tower’s stock price has risen nicely since EETimes wrote about the Indian talks next week. But HSMC will need to do a lot better than Tower if the Indian company wants to make an impact in the chipmaking business.

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