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Construction  of  first chip factory likely to start by year-end

By Gulveen Aulakh
Semiconductor makers are seeking better infrastructure and incentives to set up shop in the country.

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.

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Dive Deeper:
No role for India yet in Tesla’s new global supply chain hedge
Raw material security has drawn Musk’s EV-maker to Indonesia
'The demand is off the scale' says man behind plans to bring lithium hydroxide production to Teesside
Paul Atherley is spearheading a team that hopes to bring strategically important production to the UK for the first time
How Tesla CEO Elon Musk is hedging his global supply chain bets
Elon Musk is hunting for new Asian production hubs for his EVs. Indonesia looks like the clear winner, while India appears to…
Industrialisation in Tamil Nadu’s development
A closer look at the State’s manufacturing industry and its current challenges
One subscription that gives you access to news from hundreds of sites
Stocks to Watch: L&T, Tata Motors, PNB, Vodafone Idea, Hindalco, UltraTech
Larsen & Toubro, Tata Motors, RBL Bank, Aditya Birla Capital, Anupam Rasayan India, Apollo Tyres, Gujarat State Petronet, Honeywell Automation…
Rivian Announces Q1 2022 Results, Posts $1.6 Billion Net Loss
The company built 2,553 vehicles in the first quarter and says it maintains its 2022 production target of 25,000 units…
Get all your news in one place