Infineon Technologies AG today announced plans to expand its research and development activities in Singapore, investing approximately $271.1 million (200 million Euros) and adding about 150 new positions.

Infineon’s activity in the country is nothing new. The Munich, Germany-based logic player’s development center in Singapore opened in 1991 and provides IC and system development solutions in communication, automotive, industrial and security systems within the region. Currently, Infineon has more than 2,700 employees in Singapore of which more than 400 are R&D engineers. With the expansion, the R&D group will reach nearly 550 R&D engineers. The increase in headcount will be gradual over a three-year period to support the different phases of development, the company said.

More similar expansions are on the way, Infineon added. “Over the upcoming years, we will expand our R&D activities globally as our customers and their applications require more diversity and variety,” Wolfgang Ziebart, Infineon’s president and CEO, said in a statement. “This new R&D expansion in Singapore marks a significant step for Infineon in our growth in this region.”

According to Infineon, the Singapore expansion will allow the company to strengthen its development activities in a bevy of areas, including next-generation home-networking technologies, customer premises equipment, Internet access devices, mobile phone platforms, digital video broadcasting for mobile-TV, digital power control for power management, microcontroller for automotive and industrial applications, process technologies for wafer fabrication and packaging, and ASIC design.

The Singapore expansion is not the only Asia-based growth Infineon has announced in recent weeks. Last month, Infineon signed a memorandum of understanding with India-based semiconductor company Hindustan Semiconductor Manufacturing Co. to help create a ‘Fab City’ in India, which will involve the building of 10 fabs.

Chennai, April 14: A few weeks ago, Hindustan Semiconductor Manufacturing Corporation (HSMC) announced its plans for chip-making plants in India. The company spoke of its tie-up with Infineon Technologies of Germany, and a likely investment of $4.5 billion.

The news has generated perceptible interest globally. For instance, www.fabtech.org said, “India could now be on a path that will establish semiconductor front-end fabrication facilities,” in an article titled ‘India close to joining fab club’. Jack Lyne wrote on www.siteselection.com, “HSMC’s leaders, a group of Silicon Valley-based expatriate Indians, are openly embracing the role of national economic catalyst.”

David Manners observed, on www.electronicsweekly.com, “The Infineon deal in India to help set up ‘Fab City’ seems a much smarter deal all round than the Intel-China deal to set up a PC chip-set fab in China.” And an April 4-dated story on www.bloomberg.com noted, citing Mr Verma’s answers to a television interview, that the company would select a location for one of the manufacturing sites ‘within three to four weeks’.

Business Line contacted Mr Devendra Verma, Chairman, HSMC, for quick answers to a few questions.

Is India getting into chip-making too late in the day?

Not really. There was hardly any Indian market. It is never too late.

What are India’s strengths that you’d like to leverage in HSMC?

Indian market is growing very fast for cell phone, SIM cards, smart cards, cable and DTH (direct-to-home) box, and automotives. HSMC is focusing on products that have quite fast growth. And there is the Indian market, which can be captured too, which was not there before.

On India’s policy on semiconductor industry vis-à-vis other countries

It is fairly ok. One would have liked to see it close to 35 per cent. Certain support from state governments will also help.

On SCL (Semiconductor Complex Ltd, India) and its role in the industry

They are not playing any major role in commercial area.

On the immediate priorities before HSMC

Selection of location and announcement of financial partners.

Does the world already have enough and more fab capacity? If yes, won’t it be advantageous and economical for India to source chips rather than make them here?

One could think that way for many items. Look at the manufacturing of cell phone. Suddenly Nokia made over 25 million phone in India. Same type of performance can be repeated in semiconductors. It is predicted that by 2015 India will manufacture about $350 billion electronic goods leading to a demand for billions of semiconductor chips. It is a big market and many foundries can be justified.

What are the key drivers behind the choice of location for a semiconductor facility?

Many parameters; and especially the support package.

Do you see the Nandigram episode as a deterrent for big businesses?

I do not know about the Nandigram episode.

Hyderabad: IT bellwether Infosys’s may have faced no problem in compiling its annual results which it declared on Friday, but its plan to establish a 550-acre campus in Hyderabad has run into rough weather. The plan was touted by the AP government as a major success of its efforts to build Hyderabad as a major software destination rivalling Bangalore. But ironically, it is the failure of the administration to provide Infosys the 550 acres promised that has led to the setback.

Though the company as yet is not talking about it, informed sources say that the Infosys representatives have told the state government that the company will find a longer wait extremely difficult. Infosys has held on for over 15 months to take possession of 550 acres promised to it by the state government at Mamidipalli on the outskirts of Hyderabad. This is to be their second campus in the city.

About 100 acres of the 550 acres earmarked for the company is currently caught in the legal wrangles between IMG and the state government. The allotment to IMG for a sports academy has been cancelled but the matter is now in the courts. “Infosys has told us that their existing campus will be full shortly and they will have to look for more space now,” a highly placed government source told TOI. Infosys’s 50-acre campus at currently employs about 9,000 professionals.

Infosys was roped into the state for setting up its largest campus at a time when the company had come under fire from senior politicians in Karnataka last year. After prolonged negotiations over the location and the price, the company was allotted 550 acres for the campus on the outskirts of the city. While the land identified is close to the new international airport, the company had agreed to pay Rs 12 lakh per acre. The company and the government had signed an agreement for the project in March last year. It’s only after signing the agreement, the officials found out that about 100 acres of the allotted land was already assigned to IMG.

On finding this, Infosys asked the government to allot an alternative site to avoid any delay in the project execution. But after a detailed survey, the officials failed to find another 550 acres plot for allotment. “Now it is difficult for us to find the entire land at a single location. If we have to give, we have to do it in bits and pieces,” the official said. Infosys officials were not available for a comment.

A three-member committee has recommended Kandi village in Medak district as the ideal location for the Indian Institute of Technology. The site is 50 km from Begumpet airport, 15 km from Phase II of the Outer Ring Road and 12 km from Shankarpally railway station. It is 8 km from Sangareddy on National Highway 9 to Mumbai. The committee said 474 acres of land was available in one block, of which 125 acres was government land. Acquiring the rest would cost about Rs 10 crores, it said.

The land is level without hillocks and away from pollution zone It said another 150 acres of government land was available at a village 6 km from Kandi for future expansion of the IIT. The committee inspected Lakdaram in Patancheru mandal, Kandi and Yeddumailaram in Sangareddy mandal before recommending the Kandi site. The committee, comprising Prof R. Natarajan, former chairman of All India Council for Technical Education and former director of IIT Madras, Prof N. Balakrishnan, associate director of Indian Institute of Science, Bangalore, and Prof Rajiv Sangal, director of International Institute of Information Technology, submitted its report to Chief Minister Y.S.. Rajasekhar Reddy here on Sunday.

Releasing copies of the report to mediapersons, the Chief Minister said the committee had visited sites in Medak and Adilabad districts including Basar. After taking the views of experts into consideration, it had recommended that “from a predominantly academic perspective, and keeping in mind the probability of fulfilment of the expectations from an IIT in AP, the analyses point to the Kandi site in Medak district as the more appropriate and suitable location”. The State government has accepted the report.

Dr Reddy said he and the Congress was in favour of locating the IIT at Basar and was party to the Assembly resolution seeking the IIT there. “Since the government is not able to set up IIT at Basar, in view of the report of the committee we have thought of alternate plans for Basar,” he said. The committee felt that the existence of a large number of industries, research and development laboratories, educational institutions in the vicinity of Kandi village offers opportunities for interaction and collaboration.

“Since the proposed IIT will no doubt have extensive interaction with international institutions and academics, proximity to an international airport (Hyderabad) is a plus point,” it said. On Basara, the panel said there was availability of a large tract of flat land free of construction, free of encumbrances and a new airport is expected to come up in nearby Nanded. The weaknesses of Basar is that there are very few industries in the region and considerable infrastructure such as schools, hospitals have to be created in order to attract high quality faculty and cater to the needs of the students.

MW Zander, one of the world’s largest builders of hi-tech buildings and industrial plants, is all set to give shape to India’s semiconductor industry. MW Zander will design and construct the assembly test and mark plant (ATMP) of the $3.5 AMD-SemIndia fab. Besides, the company is also in talks with Hindustan Semiconductor Manufacturing Corporation to set up its 10 proposed foundries worth $4 billion.

Worldover, MW Zander builds semiconductor facilities for Intel, AMD, Infineon, Chartered. It also provides services to the world’s largest chip foundry — Taiwan Semiconductor Manufacturing Corporation (TSMC).

“We are designing SemIndia’s ATMP facility. We are also in talks with HSMC and SemIndia to design their facilities. Globally, facilities management and design constitutes about 25-30% of total project cost. We expect the same in India, “ MW Zander’s managing director Helmut Kurzboeck told ET.

Going by these calcualtions, the HSMC fab may yield $1 billion for MW Zander. The SemIndia fab proposed to be set up at a cost of $3.5 billion may yield $875 million in revenues for the company. “Of course, these revenues will flow over a period of many years,” Mr Kurzboeck added.

In India, MW Zander, is about 10 years old with life-sciences clients like Shantha Biotech, Ranbaxy, Reliance Life Sciences, Astra Zeneca and Ministry of Defence. The company provides clean room technology for the electronic, solar, pharmaceutical, chemical, biotechnological and food-processing industries, research in the production of clean room components, construction technology as well as facility management.

The company provides end to end solutions for setting up a chip fab from consulting planning and construction to operation of semiconductor plants. MW Zander also provides sophisticated equipment like cleanroom ceiling grid systems, ultra filter fan units, air showers and precison air-conditioning systems used in chip manufacturing.

A cleanroom is an environment, typically used in chip manufacturing or scientific research, that has a low level of environmental pollutants such as dust, airborne microbes, aerosol particles and chemical vapors. Isocab and Hutchins & Hutchins are other big cleanroom suppliers in the world.

The Government today lifted the freeze on special economic zones (SEZs) while simultaneously tightening rules by prescribing a ceiling on the size at 5,000 hectares for multi-product SEZs and increasing the processing area from 35 per cent to 50 per cent for both multi-product and sector-specific zones.

The Empowered Group of Ministers on SEZs, headed by the Union External Affairs Minister, Mr Pranab Mukherjee, met today to arrive at the decision.

After a lull of two-and-a-half months, since the last meeting of the Group froze SEZ approvals on January 22, today’s decision has come as a clear signal to developers and units in these zones that they could go ahead with their business plans.

Fixing of the upper ceiling of 5,000 hectares and raising the processing area uniformly would also allay any apprehensions about possible misuse of land for purposes other than the prime one of setting up manufacturing activities, generating exports and creating dedicated infrastructure amenities within these enclaves.

With the SEZ issue turning into a political hot potato, the Government has also given States the freedom to fix a lower ceiling on the size of the SEZ.

It has also been said that there would not be any compulsory acquisition of land for SEZs. The Commerce and Industry Minister, Mr Kamal Nath, told newspersons that the meeting also gave nod to notification for 83 applications that were formally approved.

This takes the total number of notified SEZs from 63 to 146. This leaves 88 cases to be notified out of 234 approved by the Board of Approvals so far.

The Minister clarified that the decisions taken today would be applicable to all SEZs, “including those which have already been notified.” On pending applications for SEZs, he said that they may be processed for in-principle, formal approval and notifications subject to the proviso that the State Governments will not undertake any compulsory acquisition of land for such SEZs.

He also said that the Ministry of Rural Development would formulate a comprehensive Land Acquisition Act. A broader resettlement and rehabilitation policy would be worked out to ensure livelihood from the project to at least one person from each displaced family, he added.

Later, the Commerce Secretary, Mr G.K. Pillai, told newspersons that out of the 83 applications of formal approvals that would be notified now, 54 have been cleared by the Law Ministry; the others are in the process of getting notified.

The major SEZs whose notifications are pending include Brandix Textiles City at Visakhapatnam, Kakinada SEZ at Kakinada, Infosys SEZ at Pune, Ascendas’s ITPL SEZ at Bangalore, Jindal Stainless Steel SEZ at Kalinga Nagar (Orissa), Lotus Footwear SEZ at Cheyyar, Suzlon Infrastructure SEZ at Coimbatore and Wockhardt Pharma SEZ at Aurangabad.

Officials said that once all the 234 formally approved SEZs become operational, investment would be of the order of Rs 3 lakh crore and four million jobs would be generated. They also said that exports projected by all notified SEZs numbering 82 so far (19 old plus 63 new) in 2007-08 would be Rs 67,300 crore.

Infineon has signed a memorandum of understanding with the Hindustan Semiconductor Manufacturing Company to help create a ‘Fab City’ in India which will involve the building of ten fabs.

Others involved in the huge project are Siemens, MW Zander, the clean-room specialists, and US Liquids. Infineon’s contribution will be the provision of process technology, chip design capabilities and expertise in setting up new fabs.

“Fab City will have everything in terms of infrastructure, power, water and chemicals which the semiconductor industry needs,” an Infineon spokesman told Electronics Weekly. “One reason they have chosen Infineon is because we set an industry benchmark with our fab in Malaysia where we went from cornerstone to first wafer out in a year, another reason is that our process fits with the requirements of the Indian market.”

The first fab Infineon will help build will be a 200mm 130nm facility costing about $800m to be running by 2009. The second fab will be a 300mm 90nm facility. “The other eight fabs will be announced later,” said the spokesman. All will be announced by 2010.

The Indian government recently revealed a support scheme for semiconductor manufacturing under which the government pays up to 20 per cent of a project cost through equity participation, tax breaks or other financial incentives.

The reason why the Indian government is so keen on the semiconductor industry is because it expects sales of electronic goods to increase by ten times in the next ten years, reaching $363bn by 2015, for which the semiconductor content will be worth $36bn.

Either these goods can be bought from overseas or they can be made in India using Indian-built semiconductors. Clearly its better for India to do it locally.

Asked about Infineon’s motivation for getting into the deal, the spokesman replied: “They could build our products.”

Union Communications and IT Minister, Dayanidhi Maran, was non-commital about giving a nod to the plans of Hindustan Semiconductor Manufacturing Corporation (HSMC) to invest $4 billion to set up a Fab City in India in partnership with German technology major Infineon Technologies.

Maran reiterated the government’s stance on semiconductor manufacturing units in India — that there was space only for three fabs in the country apart from the SemIndia facility in Hyderabad. The HSMC announcement comes less than a week after the government notified the semiconductor policy, which gives tax sops to companies setting up fab units.

“We will choose the best three, based on their business plan and financial credentials and not merely the biggest. Each of the proposals will be reviewed by the Appraisal Committee,” Maran said. Maran also hinted that there would be “several more announcements” in the coming weeks.

Deven Verma, founder and chairman, HSMC said the proposed Fab City had a capacity for up to 10 foundries. “We will begin the project with two foundries,” he said.

As per the terms of the MoU with Infineon, the latter will license its 130nm (nanometer) CMOS (complimentary metal oxide semiconductor) basic process technology, along with its process technologies for radio frequency, embedded flash for chip card applications, and embedded flash for automotive applications to HSMC. Infineon will also offer expertise and advice for the technology transfer, and setting up of the fab. The cost of each foundry will be $750-850 million for a 200 mm foundry, while it may cost up to $3.2-3.5 billion to set up a 300 mm foundry.

The semiconductors would be used in mobile phones, SIM cards, smart cards and automotive cards. Phase one of the project will build nodes from 2009 onwards under the 200 mm foundry, Verma said. HSMC is currentlyscouting for suitable locations across the country and will submit its proposal to the Government for approval.

Maran, on his part, instructed HSMC to “visit all the states and choose the one which gives you the best incentives.”

Technology major Hindustan Semiconductor Manufacturing Corporation (HSMC) has announced a technical partnership with Germany’s Infineon Technologies to set up a chip manufacturing unit in India with a total investment of $4 billion.

The announcement was made after a meeting between Communications and IT Minister Dayanidhi Maran and top officials of HSMC and came within a week of India unveiling a new policy for the semiconductor industry with incentives to chip manufacturers.

The unit will come up as a semiconductor complex, also being called Fab City, and manufacture chips and smart cards for mobile phones, automotive industry and set top boxes for cable TV and direct-to-home operators, HSMC officials said.

The location of the project, to be set up in two phases, is to be decided. The entire technology for the project will come from Infineon, which is Europe’s fourth largest chip manufacturer and has been in India since 1997 and set up a research centre with an investment of $150 million.

The first unit will manufacture eight-inch chips and require an investment of $1 billion, said HSMC Board Chairman Deven Verma, adding the second will make 12-inch chips and require $3.2-$3.5 billion in investment.

“I am pleased that one of the world’s leading semiconductor companies, Infineon Technologies, is entering into a strategic cooperation with HSMC for the project,” Maran said after the signing of a pact between the companies.

He said the value of the domestic demand for semiconductors would grow from the current $3 billion to $36 billion by 2015.

According to the semiconductor policy, which was announced on February 22 and came into effect from March 21, a company would need to invest a minimum of Rs.25 billion to avail the incentives for semiconductor plants and Rs.10 billion for manufacturing of other products.