Should the State subsidise a semiconductor fab?
Business Standard, 15 March 2006 The `Semindia’ project has made waves in recent months. A bright future is held out for India in making integrated circuits (chips). However, there is no case for the government to get involved in such a project through equity capital, subsidised financing, or land. The government must restrict its activites to facilitating public goods such as infrastructure. What factories are built once these public goods are in place is best left to the private sector. In the 1980s, there was a great scare in the US when Asian chip vendors were taking away market share in memory (DRAM) chips. It was argued that DRAMs were of strategic importance for the US. I have grown to be cynical about the word `strategic’. When someone says that DRAMs are strategic or oil supplies are strategic, that is often a code word for saying that we should suspend common sense and agree with whatever is about to be proposed. Big government swung into the game in the US, with a project na
