Reliance set for silicon start

Mukesh-Ambani-owned Reliance Industries is planning to stump up $6 billion (Rs 24,000 crore) in a chip-making facility in India that will pit it against global giants Intel and AMD.
The Rs 118,354-crore refinery-to-retail conglomerate submitted a proposal to the Centre on Tuesday seeking approvals to set up a unit that will manufacture silicon chips used in mobile phones, computers, liquid crystal display units and solar photovoltaic cells.
The facility will be built over the next five years.
Besides Reliance, Videocon and Moser Baer are also understood to have submitted proposals to make LCD and photovoltaic cells, respectively, in India.
Reliance Industries is keen to start work on this ambitious project once the Centre approves its proposal under the special incentive package scheme announced earlier this year by the information technology and telecom ministry.
The company hasn’t indicated where it plans to establish the plant, but industry sources said Gujarat could be a possible location.
India’s largest private sector company believes that the booming electronic and telecom industry provides ample opportunities to build a world scale project here.
However, given Reliance’s track record, the company is expected to target the international market as well.
A company spokesperson declined to confirm the development.
If it materialises, it could be the biggest diversification by the company after it ventured into retailing a few years back.
Apart from semiconductor chips, it plans to foray into solar energy.
The Reliance move comes just a couple of months after Intel, the Santa Clara-based chip manufacturing major, decided to put off its plan to set up a plant in India to manufacture, assemble and test silicon processors.
Intel went to China instead with a $2.5-billion fabrication facility. Intel had approached the Indian government in 2005 with a proposal for an assembly test mark and pack unit — which requires a significantly lower level of investment compared to a fabrication facility — and had also sought a $50-million upfront subsidy.
The government framed the special incentive package scheme in February this year after a long standoff between the finance and IT ministries over fiscal incentives.
Under the scheme, the Centre has offered a capital subsidy to investors setting up chip manufacturing units.
On offer is an incentive of 20 per cent on capital expenditure during the first 10 years for units within a special economic zone (SEZ) and 25 per cent on capital expenditure for non-SEZ units.
Non-SEZ units will also be exempt from countervailing duty.
The incentives offered by the states or their agencies will be over and above this.
Any unit can claim incentives in the form of a capital subsidy or equity participation in any combination; or capital subsidy in the form of an investment grant and interest subsid