‘Fabs will lead to a sea change in tech arena’

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: Deepak Puri, MD of Moser Baer, is an IT industry leader who speaks with authority on technology manufacturing. The past couple of decades that have seen phenomenal changes in the high-tech scenario, was the time during which Puri steered Moser Baer to be the world’s No 2 maker of optical storage media—CDs and DVDs. Now, Puri is leading the company into new ventures like photovoltaics, digital entertainment and solid-state media (pen drives). Moser Baer has not just survived, but grown at a time when India was focused on software development, losing out to China in manufacturing. Puri talks to FE’s Sanjay Anand on a range of technology issues. Excerpts:

You were an early entrant into the technology manufacturing area, but India, overall, hasn’t taken that kind of lead…

You climb the ladder one rung at a time. You start at the lower rung and go up. Unfortunately, in India, there were very few players in the tech manufacturing area. Usually, it always starts with assembling. Then you get into making one of the components, or you put together a thing like television. All that has gone because we were never competitive or had volumes of scale. For example, China today boasts of being the world’s largest TV producer, the largest LCD producer and so on. Same with phones….Forty years ago, they were just assembling lowest rung things like transistor radios or calculators. Over a period of time, China learnt about things like components and how to manufacture. So they progressed from rung to rung. Now, they make the world’s most high-tech items.

Where did India miss out?

Unfortunately, although our government was aware of it—technology manufacturing trends in Asia, especially in China—they never foresaw the impact and never encouraged a similar thing in India. And then, although I am for open market… but when India reduced tariffs and opened the market to competition, manufacturers here, whether it was their fault or not, were not prepared enough to face the onslaught. So, people found it easier to import things and put their labels on them.

There is a big debate on chip manufacturing in India nowadays. What is your take on it?

Applications to set up chip fabs have come in from 8-9 large contenders, with planned investments of about Rs 65,000 crore. We are also there with about Rs 9,000 crore. India wants to jumpstart itself into high-end technology. Now, we have to learn a lot or we will falter, and finally there will be foreign companies coming in. New entrants like us, who ventured into high-tech early on our own have developed a lot of skills. We are already operating a semiconductor fab. The first one is fully operational in our SEZ in Greater Noida. The second one that we are betting on is the thin-film one. This is photovoltaics-converting the sun’s rays into some useful energy, or electricity. We have done this without any external help, using our own technology, gathered over the past 10 years into the first integrated, totally automated manufacturing line. We sell these panels worldwide. The silicon wafer is a very expensive item and it is in great shortage. We have tied up for our silicon needs from various places for the next five years. The power cost from this technology, at 35 cents a watt, will come down to 18 cents in a couple of years.

Has the thin-film fab gone into production?

Not in commercial production yet. It will take three-four months to stabilise. The idea is that, as your capex comes down, your cost of production of power comes down, too. By 2010, we hope to bring it further down to 11 cents, which is grid parity. Grid prices will increase always, but even if you take today’s prices, they will come down to those levels. Besides, there are various other technologies in photovoltaics, which no one else in India is following, but we are.

So, you think that fabs will be a success story and eventually help India?

India has a large market and the moment we enter the high technology arena, the culture of hi-tech will follow. There is a culture behind the whole thing. The culture and the discipline have to be there. So, the answer to your question is, yes. In five-seven years, you will see a sea change in India in the electronics high technology manufacturing. A large number of factories will come up around the fabs forming the entire ecosystem, if all the promises are kept and huge factories come into production. I am certain that the applications are from very serious players, and there are going to be high-tech factories in India.

You have entered into yet another area?

Yes, we are going into solid-state media. Today, the disc is a piece of plastic. But the USB-like solid-state media is going to be quite an important area in some years. The only deterrent will be that, initially, the per MB cost of a disc will continue to be much lower. But the solid-state media prices will come down drastically in a few years. Solid-state media has one bad thing. It is quite stable, but there is a degree of instability, which is that, in some pieces, you may lose memory. Otherwise, all of us use USB/pen drives. It is so convenient. We will set up a plant for that. Meanwhile, we will get it manufactured outside. We already have a long-term agreement with ST Microelectronics for the supply of semiconductor, the memory portion of it. We also have arrangements with various companies for controllers, capacitors and circuits. We need a larger production base for selling worldwide. The customers are waiting for us.

Do you have some plans for the energy sector?

That is still some time away. The government wants that 10% of all power needs must be met by renewables. We are signing up agreements rapidly with state governments….We will set up 60-80-mw solar farms there. Later, this will be diversified. Moser Baer photovoltaics will divest to those interested in earning regular money on their investments. It will be a big business.

So, what are the constraints that could hit India’s plans to make it big?