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To: SemiBull who wrote (3375)	6/18/2002 7:00:47 PM
From: SemiBull	Read Replies (2) \| Respond to of 3493

India's MosChip makes ambitious foray in microchips By Anshuman Daga BANGALORE, June 18 (Reuters) - MosChip Semiconductor (Bombay:MOSC.BO - News), a "fabless" chip maker marking India's advance from software and engineering design to making microchips, expects its first set of products to hit the market by mid-July. "We will take delivery of five of our chips which have been fabricated in Taiwan by the end of the month," Vivek Bhargava, chief financial officer of the company, whose key founders have worked for Silicon Valley chip firms, told Reuters on Tuesday. The three-year-old firm recently raised $2.0 million from stake sales to firms including a unit of Singapore-based contract manufacturer Flextronics International (NasdaqNM:FLEX - News) and U.S.-based ESS Technology which makes chips that power DVD players. Based in the southern Indian city of Hyderabad, MosChip Semiconductor Technology Ltd, with a core team of 50 engineers, designs chips that go into computer ports but contracts out fabrication, or "fab". It aims to break ground by making use of India's low cost but world-class software and engineering talent, while getting capital-intensive chip manufacturing done in Taiwan. MosChip, which will sell the chips itself, are holding talks with Southeast Asian clients and order flow is expected to increase by September, Bhargava said by telephone. He said the company would market the chips based on "a combination of factors, including customer support and pricing", but declined to give details. "We expect to roll out 11 more chips this financial year once the first products hit the market," he said. This will multiply MosChip's consolidated revenue this year from 80 million rupees ($1.6 million) reported in the year to March, he said. The company is poised to turn profitable next year without significantly adding to its headcount, he said. "Going forward, we believe that this will be a key differentiating factor compared to the way software service companies ramp up their business (by hiring)," Bhargava said. MosChip's shares were up 2.6 percent at 37.60 rupees. The company has a market capitalisation of about $14 million. GROWING MARKET The Indian firm's focus on chips comes at a time when a profusion of handheld devices, desktop PCs and an array of electronic gadgets is creating a diverse market for chips. Chip design is not new in India's technology capital, Bangalore, though a range of factors from shortages of power and capital have curbed manufacturing ambitions. State-owned Semiconductor Complex, based in the northern city of Chandigarh was launched in the 1980s and is still loss-making. Giants like Intel Corp (NasdaqNM:INTC - News) and Honeywell International Inc (NYSE:HON - News) have recently stepped up a talent hunt, while local software service leaders like Infosys Technologies (Bombay:INFY.BO - News) and Wipro (Bombay:WIPR.BO - News) also do project work linked to chip design. Motorola Inc (NYSE:MOT - News) and Texas Instruments (NYSE:TXN - News) were early players in tapping Indian talent. Avendus Advisors, a Bangalore-based firm that focuses on the technology and services business, estimates that India's semiconductor sector comprises about 35 companies with most of them involved in pure chip design. "In terms of chip making, India now seems to be at a stage where it was initially for software about a decade ago," Bhargava said, referring to the surge in the nation's software exports to $7.5 billion in the year to March from $734 million in 1995/96.