India's Semiconductor Push: Govt Evaluating $21 Billion Worth Of Proposals For Chipmaking Revolution - Report

(MENAFN- AsiaNet News) After years of observing the Semiconductor race from the sidelines, the Indian government now reportedly faces the task of evaluating $21 billion worth of semiconductor proposals. It must decide how to allocate taxpayer support among foreign chipmakers, local champions, or a combination of both. As per a Bloomberg report quoting sources familiar with the matter,
Israel's Tower Semiconductor Ltd has proposed a $9 billion plant, while India's Tata Group has presented an $8 billion chip fabrication unit. Both projects are reportedly proposed to be located in Prime Minister Narendra Modi's home state of Gujarat.

Semiconductors have become a crucial geopolitical battleground, with countries like the US, Japan, and China heavily investing in developing domestic capabilities. Modi's initiative to transform India into a global manufacturing hub also involves attracting international chipmakers to the country. This endeavor aims to bolster India's presence in the sector, reduce dependence on costly imports, and bolster the burgeoning smartphone assembly industry.

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Under India's chipmaking incentive plan, the government would reportedly cover half the cost of approved projects, with an initial budget of $10 billion allocated for this purpose. The high-profile partnership between local firm Vedanta Resources Ltd. and Taiwan's Foxconn Technology Group fell through due to difficulties in finding a suitable partner for chip design technology. Additionally, a government-controlled project produces small quantities of mature-technology chips in the northern region of the country.

The financial incentives introduced by the Modi administration have facilitated Apple Inc in manufacturing and exporting billions of dollars' worth of iPhones from India. Furthermore, Alphabet Inc's Google is gearing up to commence phone assembly operations in the country this year. Thanks to the semiconductor fund, US memory maker Micron Technology Inc has established a $2.75 billion assembly and testing facility in Gujarat. Dholera, a town in the same state, is being developed as a potential hub for chipmaking.

Establishing a manufacturing plant in India would reportedly provide Tower Semiconductor Ltd. with a strategic foothold in a crucial emerging market, allowing it to distance itself from the setback of its unsuccessful acquisition bid by Intel Corp. While Tower's sales currently pale in comparison to industry giants like Intel and Taiwan Semiconductor Manufacturing Co, it supplies components to major customers such as Broadcom Inc. and operates in rapidly growing sectors like electric vehicles.

According to the Bloomberg report, Tower Semiconductor's plan involves scaling up a plant gradually over the span of a decade to eventually produce 80,000 silicon wafers per month. If approved, this would mark the first fabrication unit in India operated by a leading semiconductor company.

The Tata conglomerate is anticipated to collaborate with Taiwan's Powerchip Semiconductor Manufacturing Corp. for its project, although discussions have also been held with United Microelectronics Corp., as per the report. The Tata group, valued at $150 billion, has previously announced plans to commence construction of a chip fabrication plant in Dholera this year.

Both Tower and Tata's facilities are expected to manufacture mature chips, utilizing 40-nanometer or older technology, which are extensively utilized in consumer electronics, automobiles, defense systems, and aircraft, the report added.

Additionally, the Tata Group reportedly intends to construct a 250-billion-rupee ($3 billion) chip-packaging plant in eastern India. This facility will reportedly assemble and export chips, including those for automakers such as Tata Motors Ltd., which is under the group's control. Similar to the semiconductor fabrication plants, this project will also reportedly necessitate government approval before advancing further.

Tata's recent endeavors reflect its burgeoning commitment to invest billions of dollars in high-tech ventures. Notably, Tata oversees India's largest smartphone component plant, which was constructed at a cost exceeding $700 million in southern India. Furthermore, Tata acquired Apple supplier Wistron Corp.'s India factory last year and aims to establish its own iPhone manufacturing facility.

In a separate development, Japan's Renesas Electronics Corp is exploring a potential partnership with Murugappa Group's CG Power and Industrial Solutions Ltd arm to establish a chip-packaging facility.

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Approval from the Union Cabinet is required for all chip proposals, with a decision expected within weeks. To qualify for state subsidies, chip projects must provide detailed disclosures, including binding agreements with technology partners for production, financing plans, the types of semiconductors to be manufactured, and target customers.

Prime Minister Modi aims to leverage India's geopolitical influence to position the country as an essential partner for American tech ambitions amid escalating tensions between the US and China. India seeks to present itself as a stable democracy and reliable technology hub to international investors interested in tapping into its potential.

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