Business Plan SP Electronics

8/12/2019 Business Plan SP Electronics

1/23

Business Plan for PolySilicon FabricationUnit

Sunil PillaiInstitute of Business Management &Research, Ahmedabad

SP Electronics


2/23

VisionTo 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 inFabrication & Testing of SemiconductorProducts.

To Provide a Complete Chain of Servicesstarting from Designing to Implementation &

testing


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Semiconductor Design ValueChain



4/23

Demand Forecasting

SP ElectronicsSunil Pillai4

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 industrys

total revenue in India in 2005


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Sector Growth


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


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Market Forecast



7/23

Market Revenue Break up



8/23

Semiconductor Manufacturing


Sector Landscape

No operational wafer fabsin the country

Semiconductor manufacturing is limited to only threegovernment companies

Bharat Electronics Limited,

Society for Integrated Circuit Technology and Applied

Research(SITAR) Semi-Conductor Laboratory.

These PSUs manufacture not for commercial purposebut for

strategic reasons


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SWOT: Oppurtunity


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

billionworth of semiconductors over the next 10

years.


10/23

Consultants Take


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


11/23

Semiconductor Manufacturing


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


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Corporate Headquarters


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


13/23

Electronic Technology HardwarePark of India (ETHPI)


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


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Fab City Map: Ideal Location



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Resources & Infrastructure


Water:

The state authorities have offered to supply 50

million gallons of water a day

Power:

A dedicated 600 MWpower project for Fab City.

The electricity will be supplied at a cost of Rs.2.25

per unit.


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Land Acquistion


Land Allotment:

Will acquire100 acres

on a88 years lease

at anominal rate of Rs.1 per acre per year.

The government of Andhra Pradesh has also

offered other concessions including subsidized

electricity and water supply.


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National Semiconductor Policy


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 semiconductormanufacturing (wafer fabs) plant will be approximately

US$ 575 million (Rs. 2500 Crs)


18/23

Financing


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.


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Contingency plans


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.


20/23

Break Even Point Analysis


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


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Market Segmenting


Application Segment MarketThe telecommunication segment is the largestapplicationsegment contributing to the semiconductor market. Itregistered a market share of approximately 43 per

cent in2006 and is expected to grow to 46 per cent by 2009.


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Future Competitors


Company Investment(in US $ Mn)

Proposed Fabrication Facility

India Electronics ManufacturingCorp. (IEMC)

3,000 12inch Fab

Hindustan Semiconductor

Manufacturing Co. (HSMC)

4,000-4,500 8inch Fab

Videocon Industries Ltd. 230 Design-cum-fabrication complexnear 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 ManufacturingBase

Moser Baer Pvt. Ltd. 250 Worlds largest thin Film solar fabat Noida


23/23

SP ElectronicsFabricating the Future

Thank You


Business Plan SP Electronics

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