India evaluates $21 bn semiconductor proposals to boost chip manufacturing industry

The Indian government is reviewing proposals totalling $21 billion in investments aimed at fostering chip manufacturing within the country.

According to a Bloomberg report, the proposals encompass diverse ventures from both domestic conglomerates and international players.

Tower Semiconductor Ltd. of Israel has put forth a substantial proposal amounting to $9 billion, intending to establish a semiconductor plant in Gujarat, the home state of Prime Minister Narendra Modi.

Likewise, India's Tata Group has presented an $8 billion plan for a chip manufacturing unit in the same region.

The semiconductor sector has evolved into a pivotal arena of geopolitical competition, with various nations, including the US, Japan, and China, vying to strengthen their domestic chip industries.

Prime Minister Narendra Modi's administration is keen on positioning India as a global manufacturing hub, leveraging incentives to attract international chipmakers while nurturing domestic champions.

The endeavour aims to reduce reliance on costly imports and fortify India's foothold in industries like smartphone assembly.

Under India's incentive plan for chip manufacturing, the government is set to subsidise half of the approved projects' costs, with an initial allocation of $10 billion earmarked for this purpose.

Despite past setbacks, such as the collapse of high-profile partnerships, India remains steadfast in its pursuit of semiconductor self-sufficiency.

Notably, financial incentives have already brought investments from tech giants like Apple and Google, stimulating the growth of India's electronics manufacturing ecosystem.

Tower Semiconductor envisions scaling its proposed plant over a decade to produce 80,000 silicon wafers per month, potentially marking a significant milestone as the first manufacturing unit in India operated by a major semiconductor company.

Similarly, Tata Group's venture is anticipated to be in collaboration with Powerchip Semiconductor Manufacturing Corp.

Both projects focus on manufacturing mature chips widely used across diverse sectors, including consumer electronics, automotive, and defence.

At the same time, Tata Group is also eyeing the establishment of a $3 billion chip-packaging plant in eastern India.

These initiatives align with Tata's broader strategy to diversify investments into high-tech sectors, building upon its existing ventures in smartphone components and assembly.

Concurrently, Japan's Renesas Electronics Corp is exploring opportunities for collaboration in India's burgeoning chip-packaging segment.

The fate of these ambitious proposals now rests with Modi's cabinet, expected to make decisions in the coming weeks.

To qualify for state subsidies, applicants must furnish comprehensive details, including technological partnerships, financing arrangements, semiconductor specifications, and target markets.

(With inputs from Bloomberg)