The Indian government, after years of watching from the sidelines of the chips race, now has to evaluate US$21 billion of semiconductor proposals and divvy up taxpayer support between foreign chipmakers, local champions or some combination of the two.
Israel’s Tower Semiconductor Ltd is proposing a US$9 billion plant, while India’s Tata Group has put forward an US$8 billion chip fabrication unit, people familiar with the matter said. Both projects would be in Indian Prime Minister Narendra Modi’s home state of Gujarat, the people said.
Semiconductors have grown into a key geopolitical battleground, with the US, Japan and China investing heavily in developing domestic capabilities.
Photo: Reuters
Modi’s push to turn India into a global manufacturing hub also includes luring international chipmakers to the country — a bid to catch up in the sector to save money on expensive imports and enhance a growing smartphone assembly industry.
Under India’s chipmaking incentive plan, the government would bear half the cost of any approved project, with an initial budget of US$10 billion for the task. However, the world’s most populous country is yet to find success in this sphere, with the high-profile partnership between local firm Vedanta Resources Ltd and Taiwan’s Hon Hai Precision Industry Co (鴻海精密) collapsing after failing to find a suitable partner for chip design technology.
An India plant for manufacturing would give Tower a foothold in a key emerging market and help it move out of the shadow of its failed acquisition bid by Intel Corp. Although Tower’s sales are a fraction of giants Intel and Taiwan Semiconductor Manufacturing Co (台積電), it makes components for large customers such as Broadcom Inc and serves fast-growing sectors like electric vehicles.
Tower’s plan is to scale up a plant over a decade and eventually produce 80,000 silicon wafers per month, one of the people said. If approved, this would be the first fabrication unit in India operated by a major semiconductor company.
The Tata conglomerate is expected to partner with Taiwan’s Powerchip Semiconductor Manufacturing Corp (力積電) for its project, though it has also held talks with United Microelectronics Corp (聯電), the people said.
The US$150 billion Tata group has previously said it plans to begin construction of a chip fabrication plant in Dholera this year.
Both Tower and Tata’s facilities would produce so-called mature chips — using 40-nanometer or older technology — that are very widely used in consumer electronics, automobiles, defense systems and aircrafts, the people said.
The Tata Group is also planning to build a 250-billion-rupee (US$3 billion) chip-packaging plant in eastern India that would assemble and export chips, including for automakers such as the group-controlled Tata Motors Ltd. That would similarly require the government’s approval before proceeding.
The moves are part of Tata’s nascent push to invest billions of dollars in high-tech businesses. Tata operates India’s biggest smartphone component plant, constructed at a cost of more than US$700 million, in southern India. It also bought Apple supplier Wistron Corp’s (緯創) India factory last year and is seeking to build its own iPhone plant.
Separately, Japan’s Renesas Electronics Corp is looking to forge a venture with Murugappa Group’s CG Power and Industrial Solutions Ltd arm for a chip-packaging facility.
All of the chip proposals require the assent of Modi’s Cabinet, which could come within weeks. To qualify for state subsidies, any chip project would have to make detailed disclosures including whether it has binding agreements with a technology partner for production.
Applicants also need to disclose financing plans as well as the type of semiconductors they plan to make and their target customers.
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