India’s Semiconductor Sector: Tracking Government Support and Investment Trends
India is seeking foreign investments for its indigenous semiconductor industry for the development and design of fabs, ATMP, among others. We look at the latest developments impacting India’s semiconductor ambitions.
- The government is planning for a Graphics Processing Unit (GPU) cluster as part of the India AI program to support the growth of startups focused on training artificial intelligence models within India, Union Minister Rajeev Chandrasekhar told industry stakeholders on September 22. The government intends to provide support to both domestic startups and foreign companies that are interested in fostering indigenous intellectual property related to chip design for AI applications. This support will be extended through the INR 11-12 billion (US$132.61 million-US$144.67 million) design-linked incentive scheme.
- An industry stakeholder predicts that the semiconductor industry in India will generate a demand for 1.2 million jobs encompassing a wide range of roles, including engineers, operators, technicians, and more. This demand is expected to grow as manufacturing advances and design functions evolve.
- Micron Technology is set to commence construction on its semiconductor testing and assembly facility in Sanand, Gujarat, on Saturday, September 23. This development comes just three months after the US chipmaker first announced its plans to establish the plant at a total proposed investment of US$2.75 billion. Of this, Micron has committed to US$825 million and the Indian government will provide the remaining in subsidies.
- Rajasthan-based Sahasra Semiconductor, which is part of India’s Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), has stated that it will begin the commercial production of the first made-in-India memory chips at its Bhiwadi plant from September or early October 2023. This is per its CEO Varun Manwani as reported in the Financial Express. The company intends to package basic memory products like MicroSD cards and chip-on-board, to be followed by advanced packaging of products like internal memory chips. Sahasra gets a 25 percent financial incentive on capital expenditure under SPECS. Sahasra is an outsourced semiconductor assembly and test (OSAT) company, meaning it assembles and packages chips for other brands.
- Advanced Micro Devices (AMD), a major US semiconductor chip design company, has plans to invest up to US$400 million in India over the next five years, per its Chief Technology Office Mark Papermaster. AMD aims to establish its largest design facility in Bengaluru, expanding its office presence to 10 locations in the country. With already over 6,500 employees in India, the new campus is expected to create around 3,000 additional engineering roles by the end of 2028. AMD is globally recognized for its leading semiconductor chip designs and stands as a chief competitor to Intel. While it doesn’t manufacture chips itself, the company outsources this process to contract manufacturers such as TSMC.
AMD’s India investment plans is not tied to government incentives according to Papermaster.
- Following Micron’s announcement regarding the establishment of a packaging and testing unit in India, reliable industry sources speaking to BusinessLine indicate that at least 4 to 5 leading suppliers of components and materials to the semiconductor sector are also poised to take a similar course of action. Prominent industry suppliers, such as Simmtech and Air Liquide, which specialize in providing printed circuit boards and high-purity industrial gases for chip manufacturing, are currently engaged in discussions with the Indian government to initiate their operations in India. As per a source speaking to the media, it appears that Simmtech, a Micron supply chain partner, has likely obtained government approval for its venture. The company is reportedly planning to establish its unit in the industrial town of Sanand, following the footsteps of Micron in this regard.
- The Indian Express is reporting that a 6-day event (July 25-30), called Semicon India 2023, focused on semiconductors, will be held in Gandhinagar, Gujarat. PM Modi is expected to inaugurate the main event on July 28. Per a government press release: “Companies such as Foxconn, Micron, AMD, IBM, Marvell, Vedanta, LAM Research, NXP Semiconductors, ST Microelectronics, Grantwood Technologies, Infineon Technologies, Applied Materials, and other prominent players in the sector will actively participate in this momentous event.”
Semicon India 2023 will witness representation from twenty-three countries, along with Indian states, Uttar Pradesh and Gujarat. Notable academic institutions such as Indian Institute of Technology (IIT) Bombay, IIT Madras, BITS Pilani, Ganpat University, and Nirma University will also be present, highlighting their role in driving India’s semiconductor advancements, per reporting in the Hindustan Times.
- The central government has granted approval for the modernization of the Semiconductor Laboratory (SCL, Mohali), intending to transform it into a brownfield chip manufacturing unit: Minister of State for Electronics and IT, Rajeev Chandrasekhar in a written reply to the Parliament Upper House on July 21, 2203.
- The Odisha Cabinet gave its approval on July 21 for the proposed Odisha Semiconductor Manufacturing & Fabless Policy. The proposed policy aims to attract investors and facilitate their entry into the manufacturing of semiconductor/electronic chips in the eastern state of Odisha. With the implementation of this policy, the state is optimistic about establishing at least one semiconductor manufacturing unit and attracting 100 fabless design companies to set up operations in Odisha. Under Odisha’s semiconductor policy, attractive incentives of 25% will be provided for Silicon, Compound, Display & Advanced Technology Manufacturing Plants (ATMP), in addition to the Government of India’s 50% incentive. Fabless product/IP companies will also benefit from a substantial 20% incentive. Moreover, the state of Odisha will extend support to 25 undergraduate and 25 postgraduate institutes, aiding them in research and development initiatives as well as capacity building.
- Japan’s semiconductor manufacturer, Rapidus Corporation, headquartered in Tokyo, will be an important part of the India-Japan MoU, Vaishnaw said. Rapidus Corporation was formed in August 2022 with the support of eight major Japanese companies: Denso, Kioxia, MUFG Bank, NEC, NTT, SoftBank, Sony, and Toyota.
- On July 20, Union Minister Ashwini Vaishnaw announced that India and Japan have formally agreed to establish a joint mechanism aimed at facilitating collaboration between their respective governments and industries in the field of semiconductors. This move, as reported by MoneyControl, comes as both nations recognize the strategic importance of semiconductor technology. The Memorandum of Understanding (MoU) between India and Japan covers five key areas of cooperation, which include semiconductor design, manufacturing, equipment research, talent development, and enhancing the resilience of the semiconductor supply chain.
As part of the agreement, the two countries will establish an implementation organization responsible for facilitating collaboration between the government agencies and industries of both nations. This organization will work on fostering partnerships on both government-to-government and industry-to-industry levels, fostering innovation and technology exchange to bolster the semiconductor sector in both countries. The implementation organization will clear up any confusion among Japanese stakeholders about the India Semiconductor Mission.
- The Economic Times reported on July 19 that the Shiv Nadar-led HCL Group is considering a foray into the semiconductor sector. ET reported that the HCL Group is on the verge of presenting a proposal to the Centre for the establishment of an assembly, testing, marking, and packaging (ATMP) unit for semiconductors at an estimated project cost between US$200-300 million. The HCL Group as a maker of computer hardware and peripherals before venturing into the software segment.
- Foxconn is now reportedly engaged in discussions with Taiwan Semiconductor Manufacturing Co (TSMC) and Japan’s TMH Group to form new partnerships in order to establish semiconductor fabrication units in India. Both Foxconn and TSMC are headquartered in Taiwan. The Economic Times , July 14, stated that Foxconn is expected to reach an agreement soon regarding the specifics of the partnership, with a focus on producing advanced as well as legacy node chips. TSMC, a prominent player in the semiconductor industry, stands as one of the largest chip foundries globally. Meanwhile, TMH Group specializes in providing semiconductor-related solutions and offers services in the operation and maintenance of manufacturing equipment.
- Foxconn has reportedly communicated to the Indian government that it hopes to establish four to five semiconductor fabrication lines in India. The Taiwanese electronics manufacturer is expected to submit their final application within the next two months. Foxconn also reportedly told MeitY that it has reached two MoUs with technology partners; once it fulfills the government’s requirements, the announcement will be made.
- On Monday, it was reported that Foxconn has pulled out of its joint venture with Vedanta. In a statement, the Taiwanese firm said, “Foxconn has determined it will not move forward on the joint venture with Vedanta. Foxconn is working to remove the Foxconn name from what now is a fully-owned entity of Vedanta”.
Meanwhile, Vedanta also issued a statement saying, “Vedanta reiterates that it is fully committed to its semiconductor fab project and we have lined up other partners to set up India’s first foundry. We will continue to grow our Semiconductor team, and we have the license for production-grade technology for 40 nm from a prominent Integrated Device Manufacturer (IDM)”.
- Vedanta Group has acquired complete control of the joint venture established last year with Foxconn for semiconductor manufacturing in India. The joint venture, named Vedanta Foxconn Semiconductors Private Limited, was previously a wholly-owned subsidiary of Twin Star Technologies Limited, an entity within the Vedanta Group. In addition, Vedanta announced its intention to acquire a display glass manufacturing venture from Volcan Investments, the holding company of Vedanta. As part of the agreement reached last year, Volcan Investments and Foxconn had committed to investing US$19.5 billion in establishing semiconductor and display production facilities in Gujarat, in alignment with India’s ambitions to emerge as a significant player in the electronics industry. According to David Reed, CEO of Vedanta’s Semiconductor Business, “Made in India semiconductors and display glass will facilitate affordable electronics – smartphones, laptops, televisions, and electric vehicles for all Indians.”
- C-DAC has approved five applicants to the Design-Linked Incentive (DLI) Scheme, which is a part of the INR 760 billion-budget Program for Development of Semiconductors and Display Manufacturing Ecosystem in India. The DLI Scheme aims to offer financial incentives as well as design infrastructure support across various stages of development and deployment of semiconductor design(s) for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design(s) over a period of 5 years.
- Officials announced on Saturday that a UK-based company is preparing to establish a semiconductor fabrication facility in the Ganjam district of Odisha. The news agency PTI reported that an initial investment of INR 300 billion will be allocated for the first phase of the project. The Indian division of SRAM & MRAM Group, known as SRAM & MRAM Technologies and Projects India Pvt Limited, previously signed a memorandum of understanding (MoU) with the state government on March 26 to establish the semiconductor unit. The company has set a target to establish the semiconductor unit within a span of two years, with the aim of creating job opportunities for 5,000 individuals. Furthermore, they have devised plans for future expansion of the facility, intending to invest approximately INR 2 trillion by 2027. The primary focus of the semiconductor unit will be the production of memory chips, which are widely used in mobile phones, television sets, laptops, air conditioners, and ATMs. Earlier, on June 11, it was reported that Nitin Gupta was appointed as Technical Director for the SRAM & MRAM Group’s Odisha semiconductor project. More information is awaited.
- On June 28, Micron Technology, Inc entered into a Memorandum of Understanding (MoU) with the Gujarat government in India. The agreement entails the establishment of a semiconductor unit worth INR 225 billion (US$2.74 billion) at Sanand, near Ahmedabad. Spanning across 93 acres in the Sanand GIDC-II industrial estate, the Assembly, Test, Marking, and Packaging (ATMP) facility aims to generate 5,000 direct job opportunities and is expected to be operational within 18 months. The facility’s primary focus will be the conversion of wafers into Ball Grid Array (BGA)-integrated circuit packages, memory modules, and solid-state drives. (US$1=INR 82.06).
- In a statement, Vedanta Foxconn Semiconductors Limited (VFSL) announced that it has submitted a revised application to the central government, seeking incentives in accordance with the updated guidelines of the India Semiconductor Mission. Previously, VFSL had applied for incentives for manufacturing 28 nm chips. However, it has now modified its application to focus on producing 40 nm chips and receiving incentives in that specific category, according to a source. In May of this year, the IT ministry revised the guidelines for incentive applications, allowing applicants to apply once they possess production-grade technology or have formed partnerships with companies possessing such technology. VFSL is a joint venture between India’s Vedanta Group and Taiwan’s Foxconn group with a ratio of 67-33.
- Foxconn is reportedly approaching prominent Indian business houses to forge partnerships and advance its semiconductor manufacturing goals in India, according to sources cited by The Economic Times (June 27, 2023). Sources indicate that the year-old joint venture between Foxconn and the Vedanta Group may be encountering difficulties due to disagreements between the two partners. A senior Indian government official informed ET that the government has advised Foxconn to consider collaborating with a different partner. The concerns primarily revolve around the financial stability of the Vedanta Group.
- Per reporting in The Economic Times: Micron Technology will contribute US$825 million out of the total US$2.75 billion investment, while the remaining funds will come from the central government (50 percent) and the Gujarat state government (20 percent). The OSAT plant is planned to be established in Sanand, Gujarat, and is projected to commence operations in 2024. Although Micron is one of the leading makers of memory chips, such as DRAM, flash memory, and USB drives, it does not engage in actual chip manufacturing. According to Research and Markets, memory products contribute significantly to the semiconductor industry’s revenue, accounting for 35 percent of total chip sales. Micron intends to utilize the facility in India to cater to local demand and export to South Asian markets.
India’s smartphone market is currently valued at US$30 billion and assembles 150 million phones daily. Apple has expressed its intentions to expand its sourcing efforts in India, while Google Pixel is reportedly considering shifting a portion of its device production to the country. The Ministry of Electronics and Information Technology (MeitY) anticipates that the electronics manufacturing sector in India will reach a value of US$300 billion by 2026. It is important to note that India heavily relies on chip imports for these electronic devices, and the projected import bill for chips alone is expected to reach approximately US$64 billion by 2026.
- On June 22, Micron Technology, an American semiconductor manufacturer, revealed its plans to allocate a maximum of US$825 million for establishing a fresh chip assembly and testing facility in India. Micron stated that with backing from the Centre and the Gujarat government, the total investment in the factory will amount to US$2.75 billion. According to a media release on the company website: “Micron’s new facility will enable assembly and test manufacturing for both DRAM and NAND products and address demand from domestic and international markets. Phased construction of the new assembly and test facility in Gujarat is expected to begin in 2023. Phase 1, which will include 500,000 square feet of planned cleanroom space, will start to become operational in late 2024, and Micron will ramp capacity gradually over time in line with global demand trends. Micron expects Phase 2 of the project, which would include construction of a facility similar in scale to Phase 1, to start towards the second half of the decade.”
- PM Modi also met with Gary E. Dickerson, CEO, Applied Materials and invited the firm for the development of process technology and advanced packaging capabilities in India. Modi and Dickerson discussed potential of Applied Materials’ collaboration with academic institutions in India to create skilled workforce.
- “[Prime Minister Modi has] invited Micron Technology to boost semiconductor manufacturing in India,” according to an official statement issued by the external affairs ministry. Modi met with Mr. Sanjay Mehrotra, CEO of Micron on June 21, 2023 in Washington DC during his official visit to the country.
- Reuters has reported June 20 that the Indian cabinet has given its approval to Micron’s US$2.7 billion investment plan to set up a semiconductor ATMP unit in Gujarat, the home state of Prime Minister Narendra Modi. The government’s approval came in just ahead of Modi’s first official state visit to the US.
- According to sources speaking to The Economic Times, Micron’s investment is intended for the establishment of an outsourced semiconductor assembly and test (OSAT) unit, which will consist of a minimum of four assembly lines. This development will represent a significant milestone as it marks the central government’s first approval of an OSAT unit, also known as an assembly testing marking and packaging (ATMP) unit.
- According to Bloomberg’s sources, Micron Technology is currently engaged in talks to set up a semiconductor packaging facility in India, with an estimated value of at least US$1 billion. This strategic move aims to expand the company’s international presence amid increasing trade tensions between the United States and China.
It is speculated that Micron Technology might even invest up to US$2 billion in this project, and there are suggestions within the industry that an official announcement could be made during Prime Minister Modi’s official visit to the United States – June 20-24.
- The progress of a proposed $3 billion semiconductor facility in India, led by chip consortium ISMC and involving Israeli chipmaker Tower as a technology partner, has been halted due to the ongoing acquisition of Tower by Intel.
Further, in the Vedanta-Foxconn JV, it appears that technology partner STMicroelectronics is reluctant to meet the Indian government’s requirements for it to have a stake in the JV partnership. According to reporting in the Economic Times, STMicro want India to become a more mature market before having more ‘skin in the game’ as it were.
- The Modified Semicon India Programme will receive applications from June 1, 2023. The window for applicants is kept open till December 2024.
- India is now reportedly encouraging investment proposals for mature nodes of over 40nm – previous and fresh applicants to the India Semiconductor Mission scheme can apply again for incentives from June 1, 2023.
- Reports in the media indicate that Vedanta-Foxconn will likely not get incentives [worth potentially billions of dollars] to make 28-nanometer chips as they have not met the criteria set by the Indian government.
- Mike Young, a seasoned industry professional with 34 years of experience, has been selected by Vedanta to serve as the Senior Vice President in charge of the Project Management Office and Manufacturing Operations. Young brings a wealth of expertise, having previously held prominent positions such as CEO of Systems on Silicon Manufacturing Company (SSMC) in Singapore and CEO of X-FAB Sarawak in Malaysia. In his new capacity, Young will assume responsibility for supervising the implementation of manufacturing and operational procedures as Vedanta prepares to establish its inaugural semiconductor fab in India.
- Bloomberg News reported on Wednesday, May 10, that India intends to reopen the application process for $10 billion worth of incentives and assistance aimed at promoting chip manufacturing. The decision to revisit the application process stems from the observation that previously announced projects have been experiencing significant delays. More details are awaited.
- A Counterpoint Research and the India Electronics & Semiconductor Association (IESA) report projects India’s semiconductor market to value about $64 billion by 2026, showing three-times growth from US$22.7 billion in 2019. Two-thirds of this market value will be created by the country’s telecom stack and industrial applications. Reporting in Outlook puts India’s semiconductor market on course to be worth US$80.3 billion by 2028.
- The government is expected to greenlight the Vedanta-Foxconn (VSFL) bid, however, certain guarantees and information needs to be provided. VSFL have signed pacts with two companies for technology transfer, GlobalFoundries from the US and European chipmaker STMicroelectronics. The Indian government is reportedly seeking details of the technology transfer – with either of the two companies. India would also prefer if GlobalFoundries and STMicro were to buy stakes in the VSFL joint venture.
- The central government will invest US$1.2 billion to modernize the 30-year old facility at the Semiconductor Laboratory (SCL) in Mohali (Punjab state) to achieve volume production and create profitable assets. The facility currently has the capability to produce 8-inch CMOS microchip wafers used mostly in the country’s strategic areas like the space program (Mangalyaan and the Mars Orbiter Mission). The government’s investment is part of the India Semiconductor Mission’s goal to modernize and commercialize the facility, although a timeline has not been provided by the government.
- The government has earmarked INR 11-12 billion (approx. US$133.83 million-US$146 million) to support the country’s semiconductor design startups. The Semiconductor Design-Linked incentive scheme has so far onboarded 27 start-ups, per the Ministry of Electronics and Information Technology (MeitY).
- The Indian government is close to approving a US$1 billion investment proposal by Micron Technology to set up an ATMP facility in the country. Based in Idaho, USA, Micron Technology is the world’s fifth largest semiconductor company. The firm has 11 manufacturing sites across US, Japan, Taiwan, Malaysia, Singapore, and China.
- The Vedanta-Foxconn JV have secured a technology partner who will provide them with access to high-volume manufacturing-grade technology. This is a prerequisite for project approval and semiconductor incentives. Details have not been made available but the government is currently looking at the documentation. Speaking to the media, semiconductor veteran David Reed and new CEO of Vedanta-Foxconn Semiconductors Limited said: “We do have now access to a manufacturable grade, high volume technology. We have access to all the documentation and design IP, and it can support industrial and especially automotive. We can’t go into details – who it is. But we’ve already started the transfer process.”
- India will announce the first semiconductor fab in a few weeks’ time – Union Minister Ashwini Vaishnaw told media on March 14. A Deloitte report estimates the Indian semiconductor market to reach US$55 billion by 2026, with over 60 percent of the market driven by the smartphones and wearables, automotive components, and computing and data storage industries. Vaishnaw has said that India’s smartphone exports will touch US$9.5 -10 billion in 2023.
- In January this year, the US Semiconductor Industry Association (SIA) and the India Electronics and Semiconductor Association (IESA) decided to form a private sector task force to strengthen bilateral collaboration in the global semiconductor ecosystem. This was the background to US Secretary of Commerce, Gina Raimondo, and India’s Minister of Commerce and Industry Piyush Goyal signing a Memorandum of Understanding (MoU) on establishing semiconductor supply chain and innovation partnership under the framework of the India – US Commercial Dialogue. Raimondo was in New Delhi between March 7 to 10 for the Dialogue.
The US presently has a ‘Chip 4’ alliance with the world’s top semiconductor makers – Taiwan, Japan, and South Korea. Meanwhile, in September 2021, India, Japan, and Australia announced plans to establish a semiconductor supply chain initiative “to secure access to semiconductors and their components”.
The Vedanta-Foxconn JV has finalized the Dholera Special Investment Region [near Ahmedabad city, Gujarat] as the location for their semiconductor and display manufacturing facility, a senior state government official confirmed to media on February 20, 2023.
- The Economic Times is reporting [February 10, 2023] that India is expected to open a second round of applications for semiconductor chip manufacturing under the US$10 billion incentive package by mid-March. The Indian government is also said to be in “advanced talks” with four global chipmakers to set up fab here, including “New York-headquartered Global Foundries and a South Korean semiconductor firm”. A source close to the government said to ET that a lot of the large semiconductor firms like TSMC, Samsung, and Intel had already committed investments in other countries, meaning the Indian government had to be more patient and think long-term. It’s also why the government intends to speak with more firms. Further, given the nascent status of the local supply chain, the government would also need to be on listener mode, according to the source.
Moreover, it appears that proposals by ISMC, IGSS Venture, and Rajesh Exports may not get final approvals for government incentives. For instance, ISMC is a JV between Israel’s TowerSemiconductor and Abu Dhabi-based Next Orbit Ventures. Their proposal – where TowerSemiconductor offered the requisite technology – was positively viewed; however, the Israeli firm is under acquisition by US-tech giant Intel, which hasn’t been completed. The government appears to have rejected the IGSS Venture and Rajesh Exports plans as not meeting the standards of the India Semiconductor Mission and lacking good technology partners. Interestingly, when the newspaper reached out to Singapore-based IGSS, they said they had not received official notification on the status of selection.
- Currently, the central government is offering 50 percent subsidy on fab units and state governments offer 10-25 percent subsidy over and above the central grant – however, while the incentives are lucrative, applicants must meet technology standards.
- The Economic Times is reporting that Foxconn and Vedanta are seeking to bring in European chipmaker STMicroelectronics as their technology partner in their proposed India manufacturing unit. The two companies announced their joint venture February 2021, with Foxconn as lead partner. Vedanta are reportedly seeking to onboard a CXO to head their semiconductor business.
- In early November, it was reported by Economic Times that Reliance Industries and leading software firm, HCL, are “independently ‘evaluating’ deals to purchase a 30% equity stake each in the semiconductor wafer fab applicant ISMC Analog.”
- At a Gujarat rally on November 23, PM Modi made a first formal announcement of the location of Vedanta and Foxconn’s proposed semiconductor manufacturing facility in Gujarat at Dholera, in the Bhavnagar neighborhood.
- ISMC’s proposed US$3 billion semiconductor fab may begin construction in Karnataka by February 2023, as per media reports. It will be 4-5 years till ISMC’s plant becomes operational.
- Three sub-committees to vet proposals under the Indian Semiconductor Mission (ISM) have been set up by the government. The proposals will be evaluated on their financial viability, technical expertise, and the financial capabilities of their partners, among various considerations.
Included in the first committee are members from the Ministry of Electronics and Information Technology (MeitY) and the Industrial Finance Corporation of India (IFCI). The second committee includes members from the National Investment and Infrastructure Fund (NIIF). The third sub-committee has members from the 21-member ISM expert group and includes three domain experts. The ISM expert group is chaired by the Information Technology Minister Ashwini Vaishnaw.
As of reporting in the media on November 1, 2022, authorities are expected to approve the “first applications soon”. The following applications are awaiting official approval to set up semiconductor fab units – Vedanta-Foxconn, Next Orbit Ventures-Tower Semiconductor (now owned by Intel), and Rajesh Exports. The consortiums have applied for incentives under the US$10 billion ISM package.
- The US deputy assistant secretary, South and Central Asia, Afreen Akhter, is leading a trade mission of semiconductors industry to India and has had meetings with India’s top government officials. The US intends to support India overcome challenges in the semiconductor supply chain and boost its local semiconductor manufacturing capacity. The US publicly seeking to strengthen its partnerships with “like-minded countries” like India and Taiwan. In a related context, in October, the US Department of Commerce implemented new export controls on advanced computing and semiconductors sold to China.
- The government and the India Semiconductor Mission is likely to start approving proposals to set up electronic chip and display manufacturing plants in the country in the next 30-60 days / over the next couple of months, as per Minister of State for Electronics and IT Rajeev Chandrasekhar’s comments during a virtual address at the IESA Vision Summit held on October 12, 2022.
- The Ministry of Electronics and IT has plans to spend US$1.25-US$1.30 billion to modernize and upgrade its semiconductor laboratory (SCL) in Mohali. This spending is also targeted at strengthening intellectual property rights in India’s semiconductor sector. The SCL has now invited bids for the lab upgrade; qualified bidders must have a commercial partner on board to produce fabrication of chips designed by the lab. The last date for submitting bids to the SCL’s request for proposal (RFP) is October 25, 2022. The SCL aims to be able to produce 28-nm chips after upgradation.
- The government has approved modifications to the “Program for Development of Semiconductors and Display Manufacturing Ecosystem in India”, including fiscal support for project cost and capital expenditure. Following discussion with potential investors, it is expected that work on setting up the first semiconductor facility will commence soon. More details below.
- Vedanta-Foxconn are set to finalize a location for their facility in the next few weeks. The consortium are reportedly seeking a 800-1000 acre land parcel that is also well connected with Ahmedabad. The Gujarat government, as of media reports on September 16, showing sites at Sanand and Mandal-Becharaji in Ahmedabad district, two locations near Vadodara in central Gujarat, Dholera, Himmatnagar, Jamnagar, and Kutch. The plant has to be located at a distance from national and state highways so to cut off any vibration from heavy traffic movement. Further, no other major industry should be located in its vicinity.
- Various investor-technology consortiums like IGSS are asking the Indian government to make a final decision by October on approving incentives for applicants to the semiconductor manufacturing incentives program.
- Vedanta and Foxconn, in a 60-40 joint venture, will be setting up India’s first semiconductor production plant, a display fab unit, and a semiconductor assembling and testing unit over 1000 acres in Ahmedabad, state of Gujarat. The plant will begin production in two years as Foxconn plays the role of technical partner while Vedanta provides financial backing. The investment is worth over INR 1.54 trillion (approx. US$20 billion) and semiconductor manufacturing will be carried out by the holding company, Volcan Investments Limited.
- International consortium ISMC (US$3 billion investment) and Singapore-based IGSS (investment worth INR 256 billion) will be setting up semiconductor plants in Karnataka and Tamil Nadu, respectively.
- The Indian government confirmed it has received proposals from five companies to establish electronic chip and display manufacturing plants with an investment of INR 1.53 trillion (approx. US$20.5 billion). Given the time-intensive decision-making process and international travel disruptions due to COVID-19, there is currently no firm deadline in place for companies submitting their applications to India’s semiconductor chip design and manufacturing scheme: Rajeev Chandrasekhar, minister of state for electronics and IT, speaking to The Economic Times. Initially, the first window for applications was until February 15.
- The Ministry of Electronics and Information (MeitY) is seeking applications from 100 domestic companies, start-ups and MSMEs under its Design Linked Incentive (DLI) Scheme. The scheme has three components – Chip Design infrastructure support, Product Design Linked Incentive and Deployment Linked Incentive. C-DAC (Centre for Development of Advanced Computing), a scientific society operating under MeitY, will serve as the nodal agency for implementation of the DLI scheme. The DLI scheme aims to nurture at least 20 domestic companies involved in semiconductor design and facilitate them to achieve turnover of more than INR 15 billion in the next five years. A dedicated portal has been made available – www.chips-dli.gov.in – for inviting online applications from January 1, 2022 to December 31, 2024. The applicants can find the guidelines of the DLI Scheme on the portal and register themselves for availing support under the scheme.
- The IT ministry has released guidelines for implementation of the scheme and a semiconductor portal is being prepared for accepting and processing applications from interested companies. See here for government notified PDF links and application guidelines.
- India announced on December 30, 2021 that the government will start receiving proposals from companies for semiconductor and display manufacturing from January 1, 2022. Guidelines for the schemes have been notified. See here for information on the application process and fiscal support available: Semiconductor Companies Can Submit Proposals to Indian Govt. from January 1, 2022
- To learn more about the Indian government’s fresh incentives and ambitious support agenda for semiconductors, read our article: What Can Chip Companies Expect from India’s New Semiconductor Incentives Package?
- In order to drive long-term strategies for developing a sustainable semiconductors and display ecosystem, a specialized and independent “India Semiconductor Mission (ISM)” will be set up by the government. The India Semiconductor Mission will be led by global experts in semiconductor and display industry and act as the nodal agency for efficient and smooth implementation of the schemes on Semiconductors and Display ecosystem.
- On December 15, 2021, the Indian government cleared a INR 760 billion (>US$10 billion) package to boost semiconductor and display manufacturing. The program aims to provide attractive incentive support to companies / consortia that are engaged in Silicon semiconductor fabs, display fabs, compound semiconductors / silicon photonics / sensors (including MEMS) fabs, semiconductor packaging (ATMP / OSAT), semiconductor design. Incentives worth INR 2.3 trillion (approx. US$30.16 billion)will be available to position India as global hub for electronics manufacturing.
- Over 20 semiconductor manufacturing and designing companies in high-end, display, and specialty fabrication have reportedly submitted Expressions of Interest (EOIs) to set up manufacturing plants in India. The deadline was April 30, 2021.
- The government is open to introducing new incentives for chipmakers, beyond those detailed in the PLI scheme. It will likely be based on the investment coming in and the company’s area of work, type of fab, and requirement. No further information has been put out yet.
- India Briefing spotlights the latest developments in India’s nascent semiconductor industry, where the talent pool has focused, and recent government initiatives to boost investment growth.
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Semiconductor schemes in India
Semiconductor scheme in India
Application form and submission guidelines
Scheme for setting up of Semiconductor Fabs in India
Link to PDF: Gazette Notification on Tuesday, December 21, 2021.
Link to PDF: Released December 30, 2021
Scheme for setting up of Display Fabs in India
Link to PDF: Gazette Notification on Tuesday, December 21, 2021.
Link to PDF: Released December 30, 2021
Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities in India
Link to PDF: Gazette Notification on Tuesday, December 21, 2021.
Link to PDF: Released December 30, 2021
Design Linked Incentive (DLI) Scheme
Link to PDF: Gazette Notification on Tuesday, December 21, 2021.
Link to PDF: Gazette Notification on Thursday, December 30, 2021.
Link to Press Release dated January 16, 2022: Applications invited under the Design Linked Incentive (DLI) Scheme from domestic semiconductor chip design firms
A dedicated portal has been made available – www.chips-dli.gov.in – for inviting online applications from January 1, 2022 to December 31, 2024. The applicants can find the guidelines of the DLI Scheme on the portal and register themselves for availing support under the scheme.
Modifications to the Program for Development of Semiconductors and Display Manufacturing Ecosystem in India
On September 21, 2022, the Cabinet, chaired by Prime Minister Narendra Modi, approved key modifications to the Program for Development of Semiconductors and Display Manufacturing Ecosystem in India:
- Fiscal support of 50 percent of project cost on pari-passu basis for all technology nodes under Scheme for Setting up of Semiconductor Fabs in India.
- Fiscal support of 50 percent of project cost on pari-passu basis under Scheme for Setting up of Display Fabs.
- Fiscal support of 50 percent of capital expenditure on pari-passu basis under Scheme for Setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor ATMP /OSAT Facilities in India. Additionally, target technologies under the Scheme will include discrete semiconductor fabs.
Under the modified program, a uniform fiscal support of 50 percent of project cost shall be provided across all technology nodes for setting up of semiconductor fabs. Given the niche technology and nature of compound semiconductors and advanced packaging, the modified program shall also provide fiscal support of 50 percent of capital expenditure in pari-passu mode for setting up of compound semiconductors / silicon photonics / sensors / discrete semiconductors fabs and ATMP/OSAT.
This article was originally published on April 6, 2021. It was last updated August 16, 2023.
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