India's "Economic Times" reports that the Indian government is likely to give final approval for two semiconductor fabs within a week. The Minister for Communication and Information Technology announced an agreement in principle in September, but the final approval was not forthcoming.
The consortium behind one of the proposed fabs is IBM Corporation (NYSE: IBM), India's Jaiprakash Associates, and Israel's Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM). The consortium behind the second fab is Hindustan Semiconductor Manufacturing Co., STMicroelectronics NV (NYSE: STM), and Malaysia's SilTerra.
"Economic Times" adds, "India's general elections are coming up in April or May, and the ruling party (Congress) took a beating in the Delhi Assembly elections in December. As a result, there has been apprehension within the industry that the proposed fabs may not get final approval, which is essentially needed for the two consortia to take their plans forward. But sources tell us the final approval for the two manufacturing plants will come within a week. Once a general election date is announced, a code of conduct will prohibit ministers from sanctioning grants and related payments out of discretionary funds. Ministers and politicians will be barred from laying the foundation stones for new projects. Therefore, if the government is serious about the whole project, final approval for the fabs must be announced before the election date is revealed." It cautions, however, "If approval is not announced soon enough, the house of cards will fall down. No one can predict the outcome of general elections."
If the fabs are approved, this should boost Tower's revenue from the fab's operations itself and from the ability to use it to meet the needs of customers, especially for the 300-millimeter product.
Published by Globes [online], Israel business news - www.globes-online.com - on February 5, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014