After four years of waiting, India’s plans to set up two chip manufacturing units with an investment of over ₹63,000 crore is yet to see the light of day.

Two consortiums which had committed to set up semiconductor wafer fabrication units in India are now unable to raise enough funds as the existing fabs run by some of their partners in other parts of the world are facing demand issues.

The consortiums include one led by Jaiprakash Associates, which had partnered US giant IBM and Tower Semiconductor of Israel, and another led by HSMC Technologies, which had partnered ST Microelectronics and Silterra Malaysia.

The two proposed fabs were the biggest component of the Electronic and Semiconductor Policy rolled out in 2012.

“Overcapacity in chip manufacturing is a challenge. There are three-four companies (within the consortiums) and they are themselves saying they are not finding adequate business opportunities for their existing plants elsewhere,” Ravi Bansal, Joint Secretary, Ministry of Communications and IT, told BusinessLine.

So far there is almost zero high-end electronics manufacturing that happens in India. Although many large mobile handset makers have, on paper, started their manufacturing units here, what really happens is little more than assembly, with value addition of just about 1-2 per cent.

Now, even the Centre’s tone is shifting — from talking about actual electronics manufacturing to focusing more on designing chips in India.

“We don’t want a routine chip manufacturing company receiving the EDF (Electronics Development Fund). But (fund) somebody who does a particular aspect of chip design and creates an intellectual property for it,” Basal said while talking about the focus of EDF, the Centre’s new ₹10,000-crore start-up fund.

A similar sentiment is echoed by the top companies in the space.

The world’s largest chipmaker Intel has also clarified that it will not manufacture in India even if the fabs are finally set up.

“India should not focus on manufacturing microprocessors in the country as there’s already overcapacity in the space globally. Instead, chip design is an area that’s closer to India’s skill base and that’s where we can lead the world. Even China aspires to be there,” said Intel India President Kumud Srinivasan.

Qualcomm India head Sunil Lalvani said the vision of Make in India must start with solid foundation from a design perspective.

“We truly believe that the design component or the design element is a key enabler of Make in India. With the local design capabilities, and a market that is growing as fast as India is, we could play a key role in making this the design hub of the world,” he said.

Taiwanese chip maker Mediatek doesn’t believe in manufacturing chips at all. The company outsources its entire manufacturing and feels chip design is something where India can help the company.

“In terms of chip designing, India has no shortage of skills. We already have two development centres here and about 500 people are already designing chips in India,” said Finbarr Moynihan, General Manager for Corporate International Sales at Mediatek.

Moynihan further said if India is looking at local chip manufacturing to get more jobs, then it may be a wrong approach. “China, Japan, US, Korea, Israel and Germany have all the big fabs. A wafer fab doesn't employ very many people. It is all automated,” he said.