Abstract
TSMC announced in February 2007 that it will open an office in India. TSMC chose India's fifth largest city, Bangalore, as the location for its first Indian office. This move made TSMC the first Taiwanese semiconductor manufacturer to enter India. This report analyzes the strategic thinking behind TSMC's move from the perspectives of India's market structure, government policies and human resources, and will also outline challenges TSMC is likely to face in India.
There are some factors specific to India that will present challenges to TSMC's entry into the Indian market.
Setting up Office in India is Time Consuming, Complicated
Although the Indian government has been active in attracting foreign companies to India, corruption and inefficiency in government departments responsible for the establishment of offices and subsidiaries of foreign companies are initial challenges that every foreign company wishing to do business in India faces. Apart from the establishment of a company, bank account applications and corporate network construction involve slow application processes. Price bargaining and potential under-the-table deals can also sap much of the energy of foreign businesses in India.
Local Conditions Present Challenges for Management
The caste system still exists in India and is an area that companies setting up operations in India must pay careful attention to. The caste system is an important factor in areas such as personnel management and promotions and an understanding of the caste system is essential for all managers working in India.
In addition, due to the many international companies operating in India, there is a great demand for talented professionals. Professionals with experience are therefore actively sought out by other companies. This has caused employee turnover in India to soar and employee retention therefore deserves close attention.
A Lack of Infrastructure
Infrastructure is still lacking in India, especially for water and electricity. This is a major problem that all foreign companies face in India. Therefore, manufacturers investing in India, especially those companies investing in semiconductor fabs, must make plans for water and electricity infrastructure.