Govt’s chip strategy makes progress with $21 bn plans
The Indian government, after years of watching from the sidelines of the chips race, now has to evaluate $21 billion of semiconductor proposals and divvy up taxpayer support between foreign chipmakers, local champions or some combination of the two.
Israel’s Tower Semiconductor Ltd. is proposing a $9 billion plant, while India’s Tata Group has put forward an $8 billion chip fabrication unit, people familiar matter said. Both projects would be in Prime Minister Narendra Modi’s home state of Gujarat, the people said, declining to be named as the matter is not public.
Semiconductors have grown into a key geopolitical battleground, with the US, Japan and China investing heavily in developing domestic capabilities. Modi’s push to turn India into a global manufacturing hub also includes luring international chipmakers to the country — a bid to catch up in the sector to save money on expensive imports and enhance a growing smartphone assembly industry.
Under India’s chipmaking incentive plan, the government would bear half the cost of any
approved projects, with an initial budget of $10 billion for the task. The world’s most populous country is yet to find success in this sphere, with the high-profile partnership between local firm Vedanta Resources Ltd. and Taiwan’s Foxconn Technology Group collapsing after failing to find a suitable partner for chip design technology. A government-controlled project makes small quantities of mature-technology chips in the northern part of the country.
The Modi administration’s financial incentives are helping Apple Inc. make and export billions of dollars in iPhones from India, while Alphabet Inc.’s Google is preparing to also assemble phones in the country this year.
The semiconductor fund helped US memory maker Micron Technology Inc. set up a $2.75 billion assembly and testing facility in Gujarat. The town of Dholera in that state is being developed as a prospective chipmaking hub.
An India plant for manufacturing would give Tower a foothold in a key emerging market and help it move out of the shadow of its failed acquisition bid by Intel Corp. Although Tower’s sales are a fraction of giants Intel and Taiwan Semiconductor Manufacturing Co., it makes components for large customers such as Broadcom Inc. and serves fast-growing sectors like electric vehicles.
Tower’s plan is to scale up a plant over a decade and eventually produce 80,000 silicon wafers per month, one of the people said. If approved, this would be the first fabrication unit in India operated by a major semiconductor company.
The Tata conglomerate is expected to partner with Taiwan’s Powerchip Semiconductor Manufacturing Corp. for its project, though it has also held talks with United Microelectronics Corp., the people said. The $150 billion Tata group has previously said it plans to begin construction ofa a chip fabrication plant in Dholera this year.