India's first chip production to begin in Micron's Gujarat facility

India will break ground in August on its first semiconductor assembly plant and kick off production of its first domestically-manufactured microchips by the end of 2024, as per a Financial Times report published on July 5.

India plans to break ground on its first semiconductor assembly plant in August and kick off production of its first domestically manufactured microchips by the end of 2024, as per a Financial Times report published on July 5.

Information technology minister Ashwini Vaishnaw said Micron Technology would begin construction on a $2.75-billion chip assembly and test facility in Gujarat next month, the newspaper reported.

Earlier this June, the US-based semiconductor behemoth, Micron Technology, had announced its plans to set up a new assembly and test facility in Gujarat, in an ambitious $825-million dollar investment. This facility will enable the assembly and test manufacturing for both DRAM and MAM products, addressing demand from both domestic and international markets.

While the Phase 1 is set to begin operational by the end of 2024, Phase 2 of this ambitious project is likely to begin by the end of the decade.

Once the facility becomes operational, Micron’s proposed plant is anticipated to generate nearly 5,000 direct jobs and close to 15,000 community jobs.

The recent development further reaffirms the Narendra Modi government’s promise to establish India as the largest semiconductor hub globally. On these lines, the government had announced the Semicon India Programme under the India Semicondcutor Mission (ISM) in December 2021 for the development of semiconductors and display manufacturing ecosystem in India. The programme has a financial outlay of Rs 76,000 crore.

The scheme was, however, later modified in September 2022, considering industry feedback, to enhance its competitiveness, and relaunched as the ‘Modified Semicon India Programme’.

The government’s ISM is also doing “extensive work” to back support from other supply-chain partners, including suppliers of chemicals, gases and manufacturing equipment, alongside companies interested in setting up silicon wafer fabrication plants, Vaishnaw noted in his interaction with the newspaper. “This is the fastest for any country to set up a new industry,” he said.

The pandemic-induced demand surge for electronic devices gave rise to a global semiconductor crunch. Much like the Tech space, the semiconductor space too remained mostly cushioned from the pandemic’s negative impact. The massive demand for microchips, however, paralysed the global supply chain, which is yet to recover, in turn affecting other core industries, including the auto sector.

The lingering US-Sino trade tiff as well as other geopolitical tensions around the globe have only added to the existing supply-chain woes. The US-Sino trade hostility comes as good news for India’s plans to set up a semiconductor space in the country. With potential collaborations with industry behemoths, such as Micron, India can leverage on the current chip crunch and aim at building the world’s largest chip base in the country.

The Cabinet gave its green light to the Micron facility proposal under the ‘Modified, Testing, Marking and Packaging (ATMP) Scheme’. Micron is eligible to receive up to 50 percent of the total project cost from the government. Moreover, the Gujarat government will grant an incentive to the chipmaker, given its assembly and testing facility is being set up in the state.

Also Read: PM Modi has given Rs 1,200 crore to invest in Indian semiconductor startups: Rajeev Chandrasekhar

India is on a pioneering mission to establish its capacity in producing smartphones, batteries, electric vehicles and other electronics. Micron’s Gujarat project will give the country the much-needed leap towards fortifying its tech manufacturing space, which has been seeing a sluggish growth compared to other export-driven economies.