Thematic image / Credit: Tata Electronics

It took almost  five years, but push has finally come to shove, in India’s ambitions to become a semiconductor manufacturing power,  rather than remaining just one of the biggest consumers worldwide.

IT Minister Ashwini Vaishnaw recently announced the government’s approval – and financial support – of three  proposals to set up various stages of semiconductor manufacturing ecosystem in India. This included for the first time, the most challenging and capital-intensive operation in the supply chain: the fab or fabrication unit.

Indian Minister Information Technology, Ashwini Vaishnaw briefing the media on the government's approval and support for 3 semiconductor units / Photo PIB

Tata Electronics Private Ltd will set up a semiconductor fab in Dholera, Gujarat in partnership with the Taiwan-based Powerchip Semiconductor Manufacturing Corp (PSMC), which is listed among the top ten semiconductor companies for global revenues. The total investment is INR 91,000 crores -around $ 11 billion.

The partners plan to set up India’s first AI-enabled state-of-the-art Fab, with a capacity of up to 50,000 wafers per month and will  achieve next generation factory automation capabilities by deploying data analytics and machine learning.

The Fab will manufacture chips for applications such as power management chips, display drivers, microcontrollers (MCU) and high-performance computing logic, in markets such as automotives, computing and data storage, wireless communication and artificial intelligence.

PSMC’s chairman Frank Hong said, the plant will roll out chips in the 28, 50 and 35 nanometer size. He added, “On one end India has a large and growing domestic demand and on the other end global customers are looking at India for supply chain resilience. There could not have been a better time for India to make its entry into the semiconductor manufacturing industry.”

The government has also approved a second Tata venture, anINR 27,000 crore (around $ 3.25 billion) investment in a greenfield facility in Jagiroad, Assam for assembly and testing of semiconductor chips for applications across automotive, mobile devices, AI, and other key segments to serve customers globally.

The plant that is strategically located closer to chip packaging and test industries in Singapore, Vietnam etc,  will have  a capacity to turn out 48 million chips a day. Tata is using its own technology to run this operation.

Dr Randhir Thakur, CEO & MD, Tata Electronics explained the company’s logic in addressing different elements of the semicon manufacturing process ,“The strategy of serving across the semiconductor value chain is our differentiator and will enable Tata Electronics to deliver complete system offerings to customers. We have a critical window of opportunity where we see tremendous customer pull from global players for manufacturing in India.”

The third semiconductor project clearance given by the government is to CG Power, who in partnership with Renesas Electronics Corporation, Japan and Stars Microelectronics, Thailand will set up a semiconductor unit in Sanand, Gujarat. This will cater to niche consumer, industrial, automotive and power applications, with a capacity of 15 million chips a day with an investment of INR 7600 crore (about $ 900 million).

Last year India had approved a $2.75 billion packaging plant being set up by US-based Micron Technology, in Gujarat state.

Between them these four projects have seen the Indian government commit INR 59,000 crore out of a total corpus of INR 76,000 crore  (about  $ 9 billion) it had set aside to kickstart semiconductor manufacture in India.

The Samsung Semiconductor India Research centre in Bengaluru / Photo: Samsung

Another  proposal that  --according to India's IT Minister of State Rajeev Chandrasekhar -- is under consideration is  from the Israel-based Tower Semiconductors, for  a plant that is expected to involve an investment of  $ 8 billion.

Commenting on the development, Ajai Chowdhry, a co-founder of leading Indian tech company , HCL and a fierce advocate of  hardware manufacture in India said: “This is something we have been waiting for the last 40 years and now it's finally happening. I truly believe this step will go a long way in the creation of a thriving semiconductor ecosystem in the nation for the world”.

In a competitive market this cannot be the end of the story, only the end of chapter one: Just two weeks ago the Biden administration in the US  was reported by Bloomberg to be in talks to award $ 10 billion to Intel in subsidies to fund new chip factories in  Arizona, New Mexico and Ohio. 

Other aspirants to  attract such government largesse to set up chip manufacturing in the US, include Samsung, Micron and the Taiwan-based TSMC.

But the latest India announcements will arguably persuade more global manufacturers to cultivate and grow the Indian semiconductor ecosystem. It looks as if at long-delayed India’s  vision to be a global semiconductor manufacturing destination may finally take off.

In November 2023, another American chip leader, AMD, inaugurated its largest global design centre in Bengaluru, to host approximately 3,000 AMD engineers in the coming years, focused on the design and development of semiconductor technology including 3D stacking, artificial intelligence, machine learning, and more. It is part of the company’s $ 400 million investment in India over the next five years.

Last week, Samsung Semiconductor India Research (SSIR) inaugurated its ‘Samsung Innovation Campus’ programme at the Visvesvaraya Technological University (VTU) to upskill 1100 youth in future tech domains such as Artificial Intelligence and Internet of Things and make them job ready.

SSIR is a part of the global network of Samsung Electronics for providing component solutions, in the areas of System LSI, Memory, and foundry technologies.

Hard nosed companies don’t make such focused investments unless they see semiconductor manufacture in India as a savvy business proposition