Seemingly not content with cornering a fair share of the market for offshore software applications development, India is now looking to become a manufacturing hub for the chips that power those programs.

According to a recent report from Livemint, the sub-continent is starting to attract significant investments for building new chip making assembly, testing and packing facilities.

A trio of Indian chip makers, SPEL Semiconductor, SemIndia and Tessolve, are looking to pump in $600m (Rs 2,358 Crore) in building such facilities. Livemint's report says that two chip assembly plant announced by SemIndia and Tessolve will start operations this year.

Today, India has a fledgling chip manufacturing sector that accounts for less than one percent of the global market.

India is competing with other Asian countries like Taiwan, whose chip makers already churn out $3-4bn worth of chips sales per year.

"Compared to that we have a long way to go," said D. Balakrishnan, COO of relative startup SPEL, which is also looking to invest $286m in expanding its existing facility in Chennai. However sticky approval and procedural delays have forced the company to hold back until 2009.

In its bid to become a global chip player, SPEL is aiming to triple its capacity from 435m units per year to 1 billion by 2010. Interestingly it has also received $7.7m funding including funds from US firms like California Micro Devices. Right now SPEL has around 30 customers including FairChild Semiconductor, Alliance Semiconductor and Taiwan's 02 Micro.

Tessolve is also breaking ground on a new chip assembly and testing facility in the city of Sriperumbudur. The work has started nine months late but Tessolve hopes the $200m facility will lift capacity to 3 million packaged units per day.

Like SPEL Tessolve has also recently secured funding, to the tune of $30m, and expects to close a second round worth $50m in the first half of 2008.

Tessolve also runs an engineering and testing facility in Bangalore.

Meanwhile SemIndia is also planning to build another $100m facility in Hyderabad, though it is reported that project has been delayed as well.