233677766-Business-Plan-SP-Electronics.ppt

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1. Business Plan for PolySilicon Fabrication Unit
Sunil Pillai
Institute of Business Management & Research,
Ahmedabad
SP Electronics

2. Vision
“To become the leader in the Field of Electronic
Component Manufacturing in India with a focus on Providing
End-to-End Solutions”
Mission
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•To Provide High End Value Added Services in Fabrication
& Testing of Semiconductor Products.
•To Provide a Complete Chain of Services starting from
Designing to Implementation & testing

3. Semiconductor Design Value Chain
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4. Demand Forecasting
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Current Standing of the Sector
The semiconductor design market in India was estimated to be at US$ 3.3
billion in 2006
Out of the top 25 semiconductor companies, 19 have their operations in India,
including the top 10 fabless design companies of the world
Foreign semiconductor companies such as Texas Instruments, Intel, Cypress, ST
Microelectronics and Infineon accounted for approximately 70 per cent of the
semiconductor design industry’s total revenue in India in 2005

5. Sector Growth
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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.
From 2005 to 2015, this sector is expected to register a
CAGR of approximately 29.5 per cent

6. Market Forecast
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7. Market Revenue Break up
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8. Semiconductor Manufacturing
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Sector Landscape
No operational wafer fabs in the country
Semiconductor manufacturing is limited to only three government companies
Bharat Electronics Limited,
Society for Integrated Circuit Technology and Applied Research(SITAR)
Semi-Conductor Laboratory.
These PSUs manufacture not for commercial purpose but for strategic reasons

9. SWOT: Oppurtunity
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Manufacturers of electronic devices in India have been
dependent on countries such as China, Taiwan, Korea or
Singapore to source their semiconductor product
requirements.
India will be importing approximately US$ 150 billion
worth of semiconductors over the next 10 years.

10. Consultants Take
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The absence of major chip fabrication plants presents
an opportunity to the semiconductor and EMS
companies setting up their operations in the country.
Three Plants with a Capex of US $3 Billion are
financially viable
- Frost & Sullivan

11. Semiconductor Manufacturing
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SP Electronics will have the Parent Company headquartered at
Infocity, Gandhinagar.
It will form a Subsidiary to Set up a Fabrication Plant at Fab City
Near Hyderabad at a cost of Rs.5,500 Crores.
The Design & Value added services would be provided by the
Operations Center at GIFT, Gandhinagar

12. Corporate Headquarters
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SP Electronics will be based out of Infocity at Gandhinagar.
Being located out of an Export oriented SEZ would allow it to
cater to Domestic demand.
It will be listed on BSE & NSE. We would bring out an IPO of
200 Crores to meet the short term liquidity concerns & to part
finance the Operations Center

13. Electronic Technology Hardware Park of
India (ETHPI)
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The government of Andhra Pradesh has allocated 1050 acres of
land on the outskirts of Hyderabad, at Thukkuguda (Maheshwaram
mandal, Ranga Reddy district), for the development of Fab City.
Fab City is located near the new Rajiv Gandhi International
Airport, operational since 23 March 2008, and is also strategically
positioned close to the 162km eight-lane outer-ring road and a
metro-rail transport system also being built.

14. Fab City Map: Ideal Location
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15. Resources & Infrastructure
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Water:
The state authorities have offered to supply 50 million
gallons of water a day
Power:
A dedicated 600 MW power project for Fab City. The
electricity will be supplied at a cost of Rs.2.25 per unit.

16. Land Acquistion
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Land Allotment:
Will acquire 100 acres on a 88 years lease at a nominal rate
of Rs.1 per acre per year.
The government of Andhra Pradesh has also offered other
concessions including subsidized electricity and water supply.

17. National Semiconductor Policy
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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.
The threshold investment for a semiconductor manufacturing
(wafer fabs) plant will be approximately US$ 575 million (Rs.
2500 Crs)

18. Financing
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The total cost of setting up the fabrication plant would be an estimated Rs.
5,500 Crores distributed in 3 phases.
20% amount would be contributed by Government of India under the NSP.
Rest of the capex (Rs. 4,400 Crores) would be contributed by FDI in three
phases.
All formalities for the same will be facilitated through the specially set up Single
Window Clearance system of RBI.

19. Contingency plans
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Alternate financing plans include listing on foreign exchanges
& raising money via ADRs.
Long term Debt & ECB would also be considered
Of 4,400 crores, 1,500 Crores would be raised through
equity & remaining through Debt.

20. Break Even Point Analysis
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The manufacturing plant would commence operations in 2016.
It would break even within 12 years of operation as per
calculations made by Frost & Sullivan (based on Industry analysis
& Demand Forecast).
Will appoint SemIndia as Consultant to set up the manufacturing
plant

21. Market Segmenting
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Application 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. Future Competitors
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Company Investment
(in US $ Mn)
Proposed Fabrication Facility
India Electronics Manufacturing
Corp. (IEMC)
3,000 12inch Fab
Hindustan Semiconductor
Manufacturing Co. (HSMC)
4,000-4,5008inch 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 World’s largest thin Film solar fab
at Noida

23. SP Electronics
Fabricating the Future
Thank You
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