SCL Fab In Mohali Is Too Important A Project To Be Headed By A 'Director On Deputation'

The Ministry of Electronics and Information Technology (MeitY) is in the process of hiring a director to head the Semi-Conductor Laboratory (SCL) in Mohali.

SCL, India's first and currently the only semiconductor chip fab with full production lines of industry-grade equipment and infrastructure, was recently handed over to MeitY from Department of Space. SCL is set to be transformed as a commercial fab for wider participation and a possible joint venture with player(s) from the private industry.

As the hiring and plans to transform inches ahead, an official notification for the position of the director (available on MeitY website) reveals that it will be staffed on a 'deputation' basis.

"The post is proposed to be filled on Deputation basis. The tenure of deputation would be upto three years or upto the age of superannuation, whichever is earlier." the notification reads.

That may be a "regular practice" in government run institutes, however for such a critical facility and at a time when the government has announced its intentions to give as much push as possible to get a non-negligible share in the area of semiconductor chip manufacturing, doesn't SCL deserve better?

"The Director is the Chief Executive Officer of the Society and the role involves evolving strategies and plans for achieving the objectives set forth for the Laboratory and is responsible for proper management of the Society" the notification further adds.

One hopes that the government makes the necessary amends to the mode of registration and structure (else the facility runs the risk of being treated like a "charitable society"), but for now, let us keep that topic aside and focus on the Director part.

The notification also says that "the Director is the CEO". Here is a little story that some readers may be aware of, but even then worth a revisit.

In June 2018, Brian Krzanich resigned as CEO of Intel due to reports of a consensual extramarital affair that he had with a subordinate years before.

Bob Swan, who had served as CFO for eBay, Electronic Data Systems, TRW and General Electric Lighting before joining Intel in 2016 (as CFO), was made the interim CEO followed by Krzanich's exit.

In Dec 2020 - one and a half years into Bob Swan's stint as CEO - activist hedge fund Third Point LLC forced Intel to make sweeping strategic changes after the U.S semiconductor giant suffered more product delays and lost its rank as America's highest-valued chip company.

The hedge fund reportedly holds a stake of nearly $1 billion in Intel and the full letter is available here.

In early 2021, Intel ousted its chief executive in an attempt to pivot the semiconductor giant closer to its engineering roots after it a series of technology missteps, market-share losses and pressure from the hedge fund. Pat Gelsinger who was once Intel’s technology chief was named the next CEO.

A very pertinent piece published in Forbes tiled "Relearning CEOs’ Real Job From Bob Swan’s Failure At Intel" made the following important observation.

"How many times do we have to watch companies put the wrong person in the wrong job? Bob Swan was a rock-star CFO and the wrong person to lead a technical design-focused company like Intel. At Intel, the “E” in CEO stands for Enable. They need someone who can understand and enable their real job: technical design – someone like former CTO Pat Gelsinger. Gelsinger needs to re-enter Intel focused on rebuilding its technical design mojo."

SCL may be nowhere close to Intel in its size and scale, but the business is almost the same - and is one of the toughest in the world. In fact even the business models are or will soon be the same. SCL is an Integrated Device Manufacturer which can do design to manufacturing to packaging - so is Intel.

Both are "opening up" in their own ways for contract chip manufacturing - Intel with its new "Intel Foundry Services" and SCL with its plans to attract more customers beyond academia, space and similar public sector organisations.

In my opinion, there are at least two lessons to be learned for SCL from the Intel story. One, "on deputation" has parallels to the "interim" arrangement that Intel tried to do and for which it had to pay a heavy price. Two, "someone who can understand and enable their real job" is a key factor.

Despite misconceptions in some quarters, SCL's technology capability is still very much in demand - the shortage of chips with "mature node" technologies started earlier and is expected to last longer than those with advanced nodes.

Leadership that has good grip on semiconductor product development (so that it can capture some market). and the fabrication process (so that the facility can be run to its full capacity efficiently) can quickly turn SCL around and make use of the global situation.

Working out a joint venture will need more than just technical skills - it will need good communication skills, business acumen and preferably experience in doing a similar task before.

If the joint venture partner is meant to be an Indian business house, the Director/CEO should be able to put across SCL's existing strengths and revival plans in a convincing way. If the joint venture partner is meant to a globally reputed commercial fab, the Director/CEO should be able to "speak their language."

Treating the Director/CEO role of SCL as a three-year secretary kind of post will be counter productive. It has to be someone with passion for the cause and is committed to the mission. I stress on the words "mission", "cause" etc. because compared to the generic statements listed as vision on the SCL website, the new commercialisation and modernisation plan has more specific objectives.

As per this document available on MeitY website. the key objectives are as follows:
(a) Bring autonomy, accountability, and efficiency in manufacturing of advanced technology-based VLSI circuits/compound semiconductors/MEMS for global markets
(b) Transform SCL into an entity with volume production and profitable assets
(c) Develop capabilities for design, fabrication, testing, and packaging of a wide range of semiconductor products
(d) Enhance competitiveness, improve quality, and bring cost-effectiveness

Notice (b) in particular - volume production and profitability are listed. Much of that is likely to depend on how the new CEO drives the organisation and strikes joint venture(s) and one wonders if the way the applicants are called for this post is in alignment with the new-look that the government wants to give to SCL.

Among the eligibility criteria, there is also this - "Officers working under the Central or State Governments including Autonomous Bodies, R&D Institutions, holding analogous post on regular basis or with a minimum service of three years in the posts in Level 14".

If a person with skills and passion as outlined earlier in this article exists "within the system" and is willing to move as Director/CEO of SCL, then that is great. Else, one wonders if more options should be considered including lateral entry.

One might argue that "India Semiconductor Mission (ISM) itself has not been able to hire a CEO or CTO or CFO from the industry even after about six months of opening these positions, does SCL have a better chance?"

Well, there are some differences - for example, the role of the ISM CEO is much more "administration of a decision making body" and he or she will have to work with an advisory committee of 19 members of which there are only two who have industry experience in semiconductor fabs and one in semiconductor design.

Many aspiring candidates may want a reasonable degree of autonomy. It may come as a dampener if it is not provided. The role of the CEO of SCL involves running an actual fab, product development, design and marketing - it can be more exciting if a 'free hand' can be given.

Reviving SCL in the next one to two years will have not just direct benefits of capturing a non-trivial market share in mature node chips but indirectly it will also help reduce the mental block of "India is not yet a proven ground for commercial fabs" - a factor that may have played a big role in big foundry (fab) players like TSMC or Samsung not yet choosing India despite offer of up to 50 per cent incentives from the Union government and possibly more from the state they choose to build a fab in.

The Silicon fab(s) approved from among the first batch of applicants under India's new semiconductor scheme and $10 billion incentive package will take another three to four years to be in production.

SCL running at higher capacity soon will also help address many challenges in supply chain, talent, training etc. for the new fab(s) ahead of time.

Also Read: Know How Compound Semiconductor Fabs Are Different From Silicon Fabs