Govt considers 10 chipmaking proposals under $10 billion incentive scheme

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The Indian government is considering 10 applications by chipmakers under a $10 billion capex-linked incentive scheme, with two of the proposals being for silicon fabs, three for compound semiconductor fabs, and five for packaging chips, a senior official said on September 13.

After the joint venture between Vedanta and Foxconn ended, both the Indian natural resources company and the Taiwanese major have submitted separate applications to set up fabs in India. However, both are now looking for technology partners before moving forward, and the government is currently reviewing their proposals.

The curtain-raiser for the next edition of the annual semiconductor conference was held in Bengaluru yesterday. The last edition of the conference was held in Gandhinagar, Gujarat in August and was led by the Indian government. The next edition of the event, which will be held in September 2024 in New Delhi, will be led by chip industry body SEMI (Semiconductor Equipment and Materials International).

Speaking to Moneycontrol, Ajit Manocha, the CEO of SEMI and a member of the advisory committee for India's Semiconductor Mission, said that in the past, policies did not support the setting up of a fab in India, but they now do.

“You could not do it in the past, because the policy did not focus on the real solution for bringing the potential companies to put fab. I have been in my fab business for all my life. I've been asked many times to put a fab in India during my corporate life and my answer was no because we did not have the ecosystem,” he said.

When it comes to the ecosystem, Manocha gave instances of the chemical industry, where the industry is present but does not produce special ultra-high purity chemicals.

“There was no ecosystem focus. The policy that the government of India announced calls for a support ecosystem, which is the foundation for building the fabs here. Now, there have been false alarms in the past, some companies said they will do the fab that never happened probably for the same reason because its a very difficult challenge without an ecosystem,” he added.

Terming it a time “when the stars have aligned in favour of India”, Manocha said that Micron setting up an Assembly, Testing, Marking and Packaging (ATMP) facility in India, will help build the ecosystem that will lead to a fab coming to India.

“It will be a major challenge for them, but they will bring the ecosystem with them. Established companies can bring the ecosystem with them…Part of the ecosystem is common to semiconductors as well as wafer fabs. So I think it's a very good start,” he said.

Despite offering large subsidy schemes, the government has not yet been able to attract any major foreign companies like Intel, Samsung, or TSMC to the country. This is at a time when advanced economies like the United States, Germany, the European Union, and Japan have also announced large subsidy programmes in a global race to secure a larger share of the semiconductor market.

During Prime Minister Narendra Modi's visit to the US a few months ago, semiconductor major Micron committed to establishing a $2.7 billion assembly plant in the country. According to estimates, the central and state governments of Gujarat will jointly cover 70 percent of the project's cost in the form of subsidies.

Additionally, semiconductor equipment maker Applied Materials has said it would invest $400 million to design chipmaking machinery in the country. Microchip Technology has also committed to investing $300 million to expand its semiconductor R&D footprint in India.