‘Announcements on chip fabs soon’

India will soon announce a 40 nanometre (nm) semiconductor fabrication unit and multiple compound fab proposals under the modified semiconductor investment scheme, minister of state for electronics and IT Rajeev Chandrasekhar said.

“We will certainly have, very soon, an announcement of a 40nm silicon fab. We will also have multiple compound fab proposals,” Chandrasekhar said in an interview. Chips will roll out from the fab within two to three years of the announcement, he added.

“These are not decisions running from election cycle to election cycle. These are decisions for the next decade. We will be in a position this calendar year to take the decision on the 40nm fab, and none of these decisions will be taken in a hurry,” he added. The minister did not spell out the identities of the companies that have submitted proposals.

The new proposals come after the government modified its $10 billion financial incentive scheme to support the building of semiconductor, packaging, testing, and allied fabrication units in India, accepting proposals for mature nodes, or above 40nm, without a deadline.

Vedanta Foxconn Pvt. Ltd has also applied under the modified scheme, but after the two split up and decided to apply for the scheme separately, the proposal is likely to stay with Vedanta or be replaced by a fresh one from Vedanta, Chandrasekhar said. He noted that the legal entity that applied continues to remain, and any equity changes were not relevant to the proposal.

Vedanta-Foxconn was among the first three applicants to the original scheme launched in January 2021. Chandrasekhar said proposals from the other two—International Semiconductor Consortium (ISMC) and Singapore’s IGSS Ventures—were no longer being considered by the advisory committee.

“Foxconn has indicated that they will anyway independently submit a proposal,” he said. The Taiwanese contract manufacturer is in talks with Taiwan Semiconductor Manufacturing Co. Ltd (TSMC) and a few other semiconductor fabricators, The Economic Times reported on 14 July.

The government will also launch the India Semiconductor Research Centre in a public-private partnership model, which will also modernize the Semiconductor Laboratory in Mohali, Punjab, where a research-cum-commercial fab will come up, he said.

“The India Semiconductor Research Centre is going to be announced very shortly. It’s a public-private partnership between the private sector and the government. It will include the modernization of SCL (Semi-Conductor Laboratory) as a research-cum-commercial fab,” he said. The government is looking to invest about ₹10,000 crore in the fab project. The research centre may also open a branch in South India.

The ministry of electronics and information technology (MeitY) will also work with Invest India to pursue investment deals in the semiconductor space involving entities from Japan, Taiwan, South Korea, Europe, and the US. On Wednesday, former Intel India head Nivruti Rai was named managing director and chief executive officer of Invest India, which comes under the ministry of commerce and industry. “We will be working with Invest India in going out there and aggressively positioning India as a very attractive investment destination for semiconductors,” Chandrasekhar said. MeitY is also holding the Semicon India 2023 event later this month, where it will pitch India as a destination for potential investors while showcasing recent investments in the semiconductor industry, primarily that of US-based Micron Technology Inc.

After Micron announced investments of $825 million in its $2.75 billion packaging plant, a number of proposals for setting up testing and packaging units for compound and silicon semiconductor chips have been submitted to the government, Chandrasekhar said.

The minister added that the government was comfortable with not taking equity in any of the projects the Centre and states together were financing since India was only beginning to attract potential investors and companies needed economic incentives to choose India over other countries.

“We are in the early stages of building an ecosystem. Whether five years from now, we will consider taking equity, subordinated debt at that stage... Today, it is about basically saying we want to improve your viability and make it more effective for you to manufacture in India and be more profitable,” he said.

He noted that India’s proposition to global semiconductor makers was multi-dimensional, including talent, geopolitical stability and a safe and trusted destination, in addition to financial incentives. “Given the concentration of semiconductor technology in 6-7 companies, and 3-4 geographies, a very attractive regime of markets, laws, local regulations, and capital subsidies is the only way companies will take a greenfield approach to invest in India,” he said.