Home / Industry / Manufacturing /  Construction  of  first chip factory likely to start by year-end

NEW DELHI : Multinational chipmakers are in discussions with various states to build factories, and the construction of the first such plant in India is expected by the end of the year, a government official said.

Semiconductor makers, including Taiwan Semiconductor Manufacturing Company Ltd (TSMC), are in talks with Andhra Pradesh, Karnataka, Gujarat, Tamil Nadu, Maharashtra and Uttar Pradesh as they seek out better infrastructure and incentives to set up their facilities in the country.

“The biggest names have shown interest. Many serious proposals are on the table; we’re hopeful that they will materialize soon," the official said on condition of anonymity. “We should have the first ground-breaking by the end of the year," the official added.

The government had earlier confirmed receiving proposals from five companies to build electronic chip and display manufacturing plants at a total investment of 1.53 trillion under the Semicon India Programme, which offers incentives of 76,000 crore.

A Vedanta-Foxconn joint venture, IGSS Ventures and ISMC have proposed chip plants with total investments of $13.6 billion investment and have sought the support of $5.6 billion from the Centre under Semicon India.

An independent business division, India Semiconductor Mission (ISM), with administrative and financial autonomy, has also been set up to support the development of a semiconductor ecosystem in the country. The official said that a chief executive officer for the division would be appointed soon. To attract global semiconductor makers, the government is also working on tying up supply chains and creating an ecosystem.

For chipmakers, key requirements to build a facility include consistent electricity supply, high-grade water supply, close connectivity to air or seaport, and availability of chemicals and raw materials, besides skilled workforce.

While India is reeling under a power crisis amid an intense summer, potential investors have not raised this as a red flag while discussing pre-requisites for investing in the country. “We have proactively asked this; this hasn’t even come up once as a concern... Power crisis has been resolved. Usually, the loads in April are not this high; it therefore put a lot of pressure on thermal plants, but this has been resolved now," the official said.

On supply of specialized equipment, chemicals, gases and membranes needed for ultrapure water and other raw materials required for chip manufacturing, the official said 30-35% of the bill of material of most of the ecosystem products was actually made out of India, while the rest was being imported.

“This is not a volume industry, but a quality industry; suppliers will go where the plant is, therefore, we’re certain that in four to five years, most of the manufacturing of these products will also be done in India," the official said.

The official added that the government is aggressively working on creating the talent and skill pool for the industry, with tie-ups with 100 institutions already completed, including some for training shop floor technicians.

“We’ve talked to AICTE for changing the curriculum while IIT Hyderabad is starting a BTech course in semiconductor design," the official added.


Gulveen Aulakh

Gulveen Aulakh is Senior Assistant Editor at Mint, serving dual roles covering the disinvestment landscape out of New Delhi, and the telecom & IT sectors as part of the corporate bureau. She had been tracking several government ministries for the last ten years in her previous stint at The Economic Times. An IIM Calcutta alumnus, Gulveen is fluent in French, a keen learner of new languages and avid foodie.
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