India might soon be making 1.8 lakh semiconductor wafers per month: Rajeev Chandrasekhar

Union minister of state for electronics and information technology Rajeev Chandrasekhar

If two chip fabrication proposals by Israel's Tower Semiconductor and India's Semiconductor Lab (SCL) that are in the pipeline get approved by the government, India might soon be looking at a cumulative production capacity of 1.8 lakh silicon wafers per month, Union Minister Rajeev Chandrasekhar said on March 13.

This number includes the Tata Group's Dholera fab that will build up a manufacturing capacity of up to 50,000 wafers per month. The foundation stone of the fab was laid today by Prime Minister Narendra Modi.

Two more semiconductor chip packaging projects, one in Assam and the second in Gujarat, were also flagged off simultaneously.

The three chip plants, which were greenlit by the Union Cabinet recently, will attract investments of Rs 1.26 lakh crore.

"It is a big milestone for the country today... after all the skepticism about when a fab will be set up, whether the big companies would come. We still have a few more projects in the pipeline. We will have 1.8 lakh wafers per month if SCL modernization and Tower proposals are approved," said Chandrasekhar.

Silicon wafer fabrication is one of the most technologically challenging parts of the semiconductor supply chain and each wafer typically produces 300-400 chips.

Meanwhile, the four projects are cumulatively expected to drain Rs 59,000 crore from the Rs 76,000 crore corpus of a chip incentive scheme announced by the government in 2021.

"India has the capacity and the ability to support every semiconductor investor wants to partner with the country. So, if we run out of resources in this first stage of this scheme, certainly we will go back to the Prime Minister and the government and ask for more money and I suspect that that is what is going to happen," the minister added.

The second project that was flagged off today was a semiconductor unit in Morigaon, Assam. This unit will be set up by Tata Semiconductor Assembly and Test Pvt Ltd with an investment of Rs 27,000 crore and will have the capacity to produce 48 million chips daily.

The application of these chips will be in automotive, electric vehicles, consumer electronics, telecom, mobile phones, etc.

The third project to be flagged off was a unit to be set up by CG Power in partnership with Japan’s Renesas with an investment of Rs 7,600 crore and build a capacity to produce 15 million chips per day. The unit will manufacture chips for consumer, industrial, automotive and power applications.

CG power chairman Vellayan Subbiah said, "Agar Chips ka hain intezaar, toh India hain tayaar (If we were waiting for chips, India is ready today)... When I graduated from IIT, 140 of 290 students left for the US. This will no longer be the case. From now on we will build for Bharat."

Despite offering large subsidies, the government has been struggling until now to attract any major foreign foundry such as Intel, Samsung, or TSMC to the country. This comes at a time when advanced economies like the US, Germany, the European Union, and Japan have also announced substantial subsidy programs in a global race to dominate the semiconductor market.

However, during Prime Minister Narendra Modi's visit to the US last year, semiconductor major Micron committed to set up a $2.7 billion assembling plant in the country. According to estimates, the Centre and state government of Gujarat will cumulatively bear 70 percent of the cost of the project 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 and Microchip Technology has committed a $300 million investment to expand its semiconductor R&D footprint in India.

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