Chennai: The country''s first high-density interconnections (HDI) printed circuit board (PCB) plant will come up in the Nokia Telecom Special Economic Zone, Sriperumbudur near Chennai.

It is going to be put up by Aspocomp (India) Co Ltd, the Indian subsidiary of the Finnish Aspocomp Group, the €75-million plant, and is expected to be operational during the second half of 2007 though full production will start only in 2008.

The plant will initially stamp out 50 million pieces (over 2 lakh per day) and later scale up production based on the demand.

The €154- million turnover Finnish group has followed its major global customers (Nokia, Flextronics, Motorola, Alcatel, Sanmina-SCI and others) who have set up production bases in India.

"The Chennai facility will turn out to be largest Aspocomp plant for the group in the world as we intend to double our initial investment," says president and CEO Maija Liisa Friman, Aspocomp Group Oyj.

The two-phase project will first cater to the domestic market - mainly meeting Nokia''s needs — and later the needs of other mobile phone manufacturers in India, and even cater to global demand.

According to L Balachandran, project manager and general manager India operations during the first phase the company will employ 1,500 people and 2,700 at the end of the second.

"We also make PCBs for other handheld devices, telecom infrastructure, automobiles, and consumer electronics. But our current focus is on the mobile phone market, which is registering phenomenal growth," explains Rami Raulas, senior vice president, marketing and sales.

According to him the global mobile phone instrument market is expected to touch the 1-billion mark in 2007, up from 970 million pieces currently.

The global PCB market is fragmented though a few manufacturers offer the most value. The big players in this field are AT&S, Aspocomp, Matsushita, Samsung, Compeq, Unitech and others.

"All the major players are expanding their capacities," he adds.

Competitive concerns

A PCB production plant in India is a feasible proposition when compared to the landed cost of imports from China. However, Aspocomp India would have to contend with other issues like raw material sourcing, availability of continuous power and water and regulatory environmental compliance, before it hits the profit trail.

The major factor confronting Aspocomp is waste disposal, as PCB plants are known to generate huge quantities of hazardous, non-degradable waste material. These include acids, chemicals and metals. Even though the proposed Chennai plant is being planned as a `zero discharge unit'', the solid waste containing copper and other metals requires proper disposal.

The economic viability of the Chennai plant depends on the recovery and recycling of its wastes. In India waste recovery is still in its infancy unlike in the West, where recycling waste products is a thriving industry. According to Friman, in Finland, the Finnish government owns and manages the waste-recovery process.

Shipping out the waste from India would prove costly for Aspocomp, though the company has held talks for outsourcing its waste recovery, though Friman categorically rules out Aspocomp investing in any third-party waste- recycling venture.

Her other major concerns are availability of raw materials. Since the PCB industry is relatively new to the country, there are not many major suppliers of plastic laminates, chemicals and copper foils — the major raw material. Therefore, Aspocomp India will initially depend on imports of raw materials from China, South East Asia and other countries.

"If the raw materials are available here then manufacturing in India would be very cost competitive like China," says Friman.

The proposed plant requires 20 MW power per day, making the plant largely dependent on the grid for that. Since the company does not have a firm commitment for the supply uninterrupted power from the Tamil Nadu Electricity Board, it cannot depend solely on the grid.

Says Friman, "Two to three weeks'' production will be lost if uninterrupted power is not provided to the plant. There will be a need for backup facility atleast during the startup phase."

Incidentally water is another major requirement for running a PCB manufacturing unit, as these plants are water intensive — they need huge quantities for rinsing and washing off the chemicals.

According to Balachandran the Chennai facility would require 1,200-cubic metres of water per day. "After recycling the waste water, the net requirement would be 350-cubic metres per day. The State Industries Promotion Corporation of Tamil Nadu (Sipcot) has assured water supply from the near by lake."

Despite these concerns Friman is confident that the Indian plant will become a major production base for Aspocomp''s global market. The group also plans to set up a research and development (R&D) centre in Chennai.