Tatas can’t do semiconductors
Everyone can’t do everything
Subsidy has to be used prudently
Traditional business groups in India were solid businessmen. They build capacity and catered to a controlled market. The govt guaranteed them a market through restrictions on imports and licences. The companies in turn guaranteed employment and most of the profits went back as taxes. This was the socialist model.
Then came capitalism and the old world businessmen were unable to compete. So a bunch of new startups emerged. Ambanis and Jindals were two groups. Adani too can be put in the same silo. They galloped ahead of the old world business houses like Tata and Birla.
And then the Tatas and others tried to emulate the Adanis and Ambanis. Employment opportunities were created for the likes of Nira Radia. And from industrialists of stature, these groups degraded themselves to becoming tender chasers, subsidy seekers and donation givers.
They entered every business which had a subsidy. Electric bus … here I come. Semiconductors … even better. Defence contract … wow !!!!
Tata BP Solar was probably the first solar player. Where are they ?
They fail because of related party transactions. Cyrus Mistry called it out. They threw him out. Contracts are given only to related parties – not to competent companies. They either work with global cos as vendors (imagine Tata doing labour work for iPhone as a vendor) or find completely useless global partners (PSMC is the partner for Tata semiconductors. Anyone heard of them. Have they ever made a 9 nm chip)
Now let’s see where this goes. Semiconductors need zero vibration buildings. Photo lithography equipment is very sensitive. A truck moving 9 kms away will cause a wafer to move 1 nm. Circuits will get shorted. The wafer is a waste. The plant will produce junk.
But Tatas don’t understand all this. The groups are run by generalists who think they can do everything. So Tata Projects gets the contract to make the fab. Mind you there is 80% govt subsidy here. They built a building without vibration proofing the foundation. The collaborator knows nothing. The contractor L&T (common independent director with Tata Trusts) knows even lesser.
End result, the building is ready but it can’t be used to make a chip. The blame game starts. It is a basket case. So the architects get to work. The fab building which cost 50x that of a regular building is redesigned as an office building. And the office building is now being made into the fab.
One policy maker says better to try and fail than not to try at all. Even if failure is guaranteed and can be prevented.
Startups succeed because there is no Tata Projects. But someone who knows. Incumbency is a liability. Lack of governance is a catastrophy.
A company that couldnt make stainless steel or solar cells is not going to be able to make chips. Not even potato chips. But then they haven’t tried. There was no subsidy in potato chips.