KASFAB Tools enters semiconductor manufacturing, seeks play in $125-billion market

KASFAB Tools' new facility in Dodaballabpur, in Bengaluru

Karnataka-based KASFAB Tools, a new venture by the KAS Group, on January 27 inaugurated its state-of-the-art semiconductor manufacturing facility at Dodaballabpur, around 45 km from the state capital Bengaluru, with an eye on $125-billion global chip market.

KASFAB Tools has secured a multi-million-dollar order for making specialised semiconductor process equipment, managing director Manjunath Jyothinagara told Moneycontrol.

"We have a significant contract lined up for execution within this fiscal year," Jyothinagara said. "This initial order serves as a crucial stepping stone. Successful delivery will pave the way for growth, with the potential to scale up our production capacity."

The company will initially focus on making legacy equipment at its 20,000 sq ft facility, in which it has already invested Rs 20 crore with plans to invest up to Rs 250.

Through the facility, the company is making a play for the global semiconductor equipment market, valued at a staggering $125 billion. "None of the companies in the ecosystem build everything by themselves 100 percent," Jyothinagara said.

"They do a lot of things as contract manufacturing from value chain partners, who in turn build some subsystems or the entire equipment for them. Both ways are possible," he said, highlighting the opportunity for companies like KASFAB Tools to enter the market as specialised contract manufacturers.

The company's new facility boasts a cutting-edge cleanroom environment, Class 10 and Class 100, a critical aspect of semiconductor manufacturing, high-precision welding for plastics and metals, component fabrication, and ultrasound-aided cleaning with deionized (DI) water.

"The construction of a cleanroom is a highly specialised and expensive undertaking," Jyothinagara highlighted. "Each square foot of cleanroom space incurs a substantial cost of approximately 25,000 rupees."

KAS Group has been working on high-tech manufacturing across diverse sectors including hard metals, optical fibre, and solar energy over the last decade and a half.

"Semiconductor manufacturing is a highly complex process. Unlike other industries, it involves an intricate web of over 300 steps and necessitates the utilisation of 50 to 60 specialised materials. This level of complexity far surpasses the manufacturing processes of solar panels or optical fibre," Jyothinagara said.

He also stressed the need for enhanced government support to foster the growth of Indian MSMEs in the semiconductor sector.

"We have consistently advocated for greater government support for MSMEs within this sector," he said, urging the government to revise the production linked incentive (PLI) scheme to better accommodate the needs of MSMEs.

Karnataka IT and BT minister Priyank Kharge said, "This facility is a testament to Karnataka’s commitment to fostering innovation and creating an enabling ecosystem for advanced manufacturing. It reinforces our state’s leadership in technology and engineering excellence..."