Tatas, Tower apply to set up chip foundries in India
- February 21, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Tatas, Tower apply to set up chip foundries in India
Subject: Science and tech
Section: Awareness in Computer and IT
Context:
- Minister of State for Electronics and IT Rajeev Chandrasekhar recently confirmed that the Tata Group and Israeli chip company Tower Semiconductor have applied to set up foundries in the country.
More on news:
- India is competing with some of its key allies – the US and Europe – to attract chipmakers.
- It is offering a 50% capital expenditure subsidy to successful applicants at the central level under its $10 billion incentive scheme, with state governments sweetening the deal further at their own end.
- The two fab proposals that have been received by India, and represent a total investment of about $22 billion, are one from Tata and the other from Tower Semiconductor.
- Tower’s proposal to set up a plant worth $8 billion where it aims to produce 65 nm, 40 nm and 28 nm chips.
- The Tata Group is understood to be partnering with Taiwan based United Microelectronics Corporation (UMC) or the Powerchip Semiconductor Manufacturing Corporation (PSMC).
What are the proposals currently on the table?
- India’s chip incentive scheme broadly covers three aspects of the ecosystem –
- full-blown foundries that can manufacture chips;
- packaging plants called ATMP facilities; and
- assembly and testing projects called OSAT plants.
- So far, US-based Micron Technology has cleared its proposal to set up a $2.75 billion ATMP plant, with the facility coming up in Gujarat.
- In the OSAT space, CG Power and Industrial Solutions has said it has entered into a joint venture (JV) agreement with Renesas Electronics America and Thailand-based Stars Microelectronics to set up a semiconductor assembly and testing plant in India.
- Kaynes Technology has also sent a proposal to set up an OSAT plant.
What had happened to the earlier fab proposals?
- A joint venture between Foxconn, best known as the manufacturer of iPhones, and Vedanta to set up a $19.5 billion chip plant came to an abrupt halt last year.
- Foxconn announced it was pulling out of the joint venture with Vedanta.
- While government sources maintain the two could apply separately, there has been no movement so far.
Why India’s semiconductor manufacturing industry is yet to take off?
- The planned merger between Intel and Tower, announced in February 2022, passed an antitrust review in the United States and several other geographies.
- There was a third fab proposal by Singapore-based IGSS Venture, but it was not found up to the mark by the advisory committee of the government.
Why is India focusing on semiconductor manufacturing?
- Prime Minister Narendra Modi has made chip manufacturing a top priority for India’s economic strategy as he wants to “usher in a new era in electronics manufacturing” by luring global companies.
- Building semiconductors domestically is crucial for the government’s vision to develop a domestic electronics supply chain and eventually reduce its imports from foreign countries, especially China – which despite its own challenges remains to be the number one destination for such manufacturing.
- It is a pressing time for India to venture into electronics manufacturing, with chips being an important part of the puzzle – all electronics items have semiconductor chips in them, and as more companies try to diversify their bases from China, India has an opportunity to emerge as a reliable destination.