ISMC consortium may set up 1st chip foundry
NEW DELHI: The International Semiconductor Consortium’s (ISMC’s) proposed $3 billion chip fab in Mysuru is likely to start construction as early as February if the central government okays the company’s application for financial incentives.
ISMC is one of the three consortia shortlisted by the Centre to be eligible for the incentives. The three proposals for wafer fabs worth $13.6 billion have sought government support to the tune of $5.6 billion.
“We will probably become the first state in India to have a semiconductor fab. ISMC has the technology and the capability. Subject to the central government’s approval, we hope to see work starting on this plant from February,” Karnataka minister for information technology, electronics, and skills development, Dr. C.N. Ashwath Narayan, said in an interview.
He added that ISMC would make 40-65 nanometre (nm) analog chips to “cater to the defence and automotive sectors, and then to other areas”.
The minister said he expects the semiconductor foundry to take four years to build, “but it can happen earlier too”.
As the world battled chip shortages that crippled industries during the pandemic, India offered chipmakers incentives, including financing as much as half of the project cost, to build a fab ecosystem in the country and cut its reliance on China.
The US decision to impose sweeping restrictions on the sales of semiconductors and chipmaking equipment to China is also encouraging companies to consider India as an alternative destination.
While India has expertise in designing chips, the absence of semiconductor fabs means it has to rely on imports for all its chip requirements.
Local policymakers hope the design capabilities of Indian companies will also attract companies to set up chip plants in India.
“The strength of Karnataka is design, where we are No.2 in the world. From chip designing, we now want to become a chipmaker,” Narayan added.
ISMC is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor, which was acquired by Intel Inc. this February (the deal closes early next year).
“Reliance Industries and the HCL group have cumulatively invested about 15% in the project,” a person familiar with the deal said on condition of anonymity, but neither company has confirmed the development so far.
Israel-based ISMC Analog Fab Pvt. Ltd is expected to make 65 nm analog devices, said the person cited above.
Pure-play foundries such as Tower Semiconductor, Taiwan Semiconductor Manufacturing Co. (TSMC), UMC, and GlobalFoundries do not design chips but only manufacture devices for other companies.
Semiconductors are the world’s fourth-most-traded product after crude oil, refined oil, and cars. About 50% of $134 billion of total electronics products demand is imported, according to an April 2020 joint report by the India Electronics and Semiconductor Association (IESA) and Frost and Sullivan.