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 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 Semicon 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.
India’s semiconductor industry profile
Semiconductors or chipsets are used in all modern electronic devices and technologies, with a range of applications that range from electronic products and IT hardware to defense technology, industrial electronics, medical electronics, automation (workplace, healthcare, manufacturing etc.), and the Internet of Things (IoT).
Moreover, rapid developments in the capacity for intelligent computing and growth of AI in these applications and related industries has further expanded the dependency on semiconductor research and escalated the economic value of its manufacturing capacity.
According to the India Electronics and Semiconductor Association (IESA), semiconductor consumption in India was worth US$21 billion in 2019, growing at the rate of 15.1 percent. Research and development in this industry, which includes electronic products and embedded systems, generated about US$2.5 billion in revenue.
Yet, India lags in the establishment of semiconductor wafer fabrication (FAB) units – due to a weak ecosystem and shortage of resources as compared to more competitive bases like China and Vietnam.
Semiconductor FAB units require huge investments, gallons of water for production, uninterrupted electricity supply, high operating costs, and the need for frequent technology replacement.
This is why India’s contribution to the industry has focused on its technical competencies in R&D, design, etc. due to its talent pool in IT design and R&D engineers. The Indian semiconductor design market was projected to grow by a CAGR of 29.4 percent from US$14.5 billion in 2015 to US$52.6 billion in 2020.
As per the Ministry of Electronics and Information Technology (MeitY), R&D capabilities in very large-scale integration (VLSI) and chip design are showcased by the Centre of Excellence in Nanoelectronics at Indian Institute of Science, Bangalore and the Indian Institute of Technology, Bombay. India is setting up commercial semiconductor wafer fab units and two consortia have initiated work in this regard. The proposed location is Greater Noida in Uttar Pradesh (about 40 kms from New Delhi) and in Prantij in Gujarat (about 50 kms) from Gandhinagar.
In order to overcome the capital intensive hurdles, the Indian government is actively seeking foreign capital to set up semiconductor manufacturing facilities in the country.
In early 2021, the Indian government sought proposals from interested applicants to either setup (and/or expand) semiconductor wafer/device fabrication plants (FABs) in India or their acquisition outside India. The notification about the Expression of Interest was available in Korean, Japanese, Hebrew, and Chinese – an indication of the expected investment interest from foreign players. The deadline for these proposals (Expression of Interest) was extended from March 31, 2021 to April 30, 2021.
In December 2021, the Indian government unveiled the Program for Development of Semiconductors and Display Manufacturing Ecosystem in India, with an outlay of INR 760 billion (>US$10 billion) for the development of a sustainable semiconductor and display manufacturing ecosystem in India. 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 table below for government notified PDF links.
New 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.
Between April 2000 and December 2020, India’s electronics sector received FDI worth US$3 billion, and the Indian government has allowed 100 percent FDI under the automatic route for the electronics sector. According to the Indian government, India’s semiconductor market was worth US$15 billion in 2020 and projected to reach US$63 billion by 2026 and India’s display panel market is estimated to be worth around US$7 billion and expected to grow to US$15 billion by 2025.
Through its various initiatives, India hopes to attract investments worth at least US$25 billion to build up local manufacturing capacity for semiconductors and display panels.
The following lists notable developments in the semiconductor industry:
- Karnataka could be the first Indian state to have a semiconductor fab as the ISMC consortium is set to begin construction of the plant as early as 2023. It is expected to become operational about 4-5 years from the start of construction.
- India’s first chip maker, Polymatech, has announced that it has begun manufacturing and releasing its Opto-semiconductors and memory modules into the market. Powered by Japanese technology, the company’s Opto-semiconductors are used in lighting, medical, and food sanitization applications. Polymatech’s main manufacturing plant in Kancheepuram, Tamil Nadu, makes 400,000 chips per day. In a media release, the company states it will work to raise this manufacturing capacity to 1 million chips per day or 300 million chips per year. In July, Polymatech said it would invest over US$1 billion in semiconductor chips manufacturing. Polymatech offers fully packaged Opto-semiconductors in HTCC (High-Temperature Co-fired Ceramic Substrates) and COBs (Chip on Board).
- The government has plans to incur US$1.25-US$1.30 billion in capital expenditure at its semiconductor lab (SCL) at Mohali to modernize and upgrade the lab and strengthen India’s intellectual property rights in the semiconductor space. This spending will come from the US$10 billion semiconductor incentive package announced in December 2021. The SCL is now under the IT and electronics ministry. The Economic Times is reporting that SCL is currently floating a request for proposal (RFP) inviting bids for its modernization plan and bidders must have a commercial partner for fabrication of chips developed by the lab. The deadline for submitting bids is October 25, 2022. The SCL aims to be able to produce 28-nm chips after upgradation.
- On September 14-15, 2022, it was clarified that 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. The plants will operate across a 1000-acre plot in Ahmedabad, state of Gujarat. The plant will begin production in two years. Foxconn will be the technical partner while raw materials conglomerate Vedanta will provide the financial backing. The JV investment will be worth over INR 1.54 trillion, and the semiconductor manufacturing business will be carried out by Vedanta’s holding company, Volcan Investments Limited. The project is said to create more than 100,000 jobs.
- IGSS Ventures, a consortium of companies, has signed an MoU with the Tamil Nadu Guidance Bureau in early July to set up a 300-acre high-tech semiconductor park. “Tamil Nadu has allocated nine strategic sites, including two in the vicinity of Chennai, to house a semiconductor fab that will be producing three technology nodes of wafers, ranging from 28nm, 45 nm and >=65 nm, and an industry ecosystem infrastructure that hosts semiconductor circuit designers, material suppliers, equipment suppliers, and outsourced semiconductor assembly and test players,” IGSS Ventures said in a release.
The investment, inclusive of grants, is set to be INR 256 billion, and will create over 5000 jobs spread over five years. IGSS semiconductor fab Project Suria is an applicant to the Indian Semiconductor Mission. Commercial production is expected to begin in two years, employing potentially 1500 semi-skilled and skilled personnel. Further, IGSS said that the high-tech park could “potentially see additional employment of 25,000 people with jobs generated by the ecosystem partners with an estimated investment of around ₹76,000 crore.”
- ISMC, a JV between Abu Dhabi-based Next orbit Ventures and Israel’s Tower Semiconductor, will set up India’s first chip-making plant, at an investment of US$3 billion, and have requested a 150-acre land plot in Mysuru’s Kochanahalli industrial area for the unit. The plant is set to make 65-nanometer analog semiconductor fab and will create 1500 direct jobs and 10,000 ancillary jobs. (US chip giant Intel will be acquiring Tower Semiconductor.)
- International consortium ISMC and Singapore-based IGSS are confirmed to be setting up semiconductor plants in Karnataka and Tamil Nadu, respectively. They are two among three applicants for the central government’s incentive program to set up semicon fab units in the country, the third being the Vedanta Foxconn JV.
- In a statement released to the media by the government on February 19, 2022:
i) Vedanta Foxconn JV, IGSS Ventures and ISMC have proposed to set up electronic chip manufacturing plants with US$13.6 billion investment. They seek US$5.6 billion in support from the central government under the Semicon India Program to set up 28 nm to 65nm semiconductor fabs with capacity of approx. 120,000 wafers per month.
ii) Vedanta and Elest have submitted applications to set up display fab projects with an investment of US$6.7 billion and seek support worth around US$2.7 billion. The latter have submitted proposals to set up Gen 8.6 TFT LCD Display Fab as well as 6th Generation Display FAB for the manufacture of State-of-art AMOLED display panels that are used in the advanced smartphones.
iii) SPEL Semiconductor Ltd., HCL, Syrma Technology, and Valenkani Electronics have registered under the Scheme for Semiconductor Packaging and Ruttonsha International Rectifier Ltd. has registered under the Scheme for Compound Semiconductors.
iv) Terminus Circuits, Trispace Technologies, and Curie Microelectronics have submitted applications under the Design Linked Incentive Scheme. The applicant companies have also submitted the proposals for technology acquisition, partnerships, and collaborations with research institutes as part of the applications.
v) Last year the government announced it was seeking to commercialize the ISRO-owned Semiconductor Lab (SCL) at Mohali. SCL Mohali has now been handed over to MeitY from Department of Space and will be opened up as a commercial fab for wider participation by Indian semiconductor design companies.
- In late 2021, US chipmaker giant Intel expressed its interest in setting up a new plant in India and is likely to apply for incentives under the new scheme under the Program for Development of Semiconductors and Display Manufacturing Ecosystem in India.
- India and Taiwan are currently negotiating a free trade deal, with Taiwan setting up a semiconductor manufacturing unit in India serving as a key component for expanding bilateral economic engagement. The Indian government has reportedly already proposed a number of sites for the facility. Taiwan’s leading semiconductor producers are the Taiwan Semiconductor Manufacturing Company (TSMC) and the United Microelectronics Corporation (UMC). TSMC manufactures around 50 percent of all semiconductors globally as per industry estimates.
- Business Standard reports that “Tata Group is in discussions with some major international companies, including those from Taiwan, for its foray into the semiconductor chip business.”
- The Japan-based electronics company, Panasonic Corporation, has plans to set up a new plant at Jhajjar in Haryana for the production of refrigerators targeting the Indian market. Panasonic also intend to set up an R&D center for appliances, consisting of two technical divisions, to strengthen its product development in India.
- Samsung India Electronics Ltd will set up its new corporate office in the Goregaon suburb of Mumbai; the company has signed a deal to lease 100,000 square feet of space at Oberoi Realty Ltd’s commercial property Commerz II.
- Growth stage investor Next Orbit Ventures has planned to invest US$100 million in a semiconductor fabrication project based in Gujarat.
- Californian product engineering company INVECAS has planned to invest between US$15-20 million for the setup of design centers in Bengaluru and Hyderabad over the next few years.
- German semiconductor firm Infineon Technologies has partnered with the non-profit National Skill Development Corporation (NSDC) to impart education and training regarding semiconductors to young talents for the purpose of developing India’s electronics manufacturing ecosystem.
- US semiconductor company Freescale merged into ‘NXP Semiconductors’ in 2015.
- US engineering firm Aricent acquired Bengaluru’s chip design services company SmartPlay for US$163 million, making this the largest acquisition of semiconductors in India.
- For the development of trade and technical cooperation in the semiconductor industries between India and Singapore, IESA and the Singapore Semiconductor Industry Association (SSIA) have signed a memorandum of understanding (MoU).
Initiatives of the government
Notable initiatives undertaken by the Indian government for the development of the semiconductor industry include:
- On December 30, 2021, the Indian government announced it will start receiving proposals from companies for semiconductor and display manufacturing from January 1, 2022. To learn more about the incentives on offer and eligibility criteria, see our article here.
- On December 15, 2021, the Program for Development of Semiconductors and Display Manufacturing Ecosystem in India was announced, with an outlay of INR 760 billion (>US$10 billion) for the development of a sustainable semiconductor and display manufacturing ecosystem in India. This funding of US$10 billion will be provided over a period of six years and is expected to bring in investments of up to INR 1700 billion (US$22.5 billion). Overall, the program will provide attractive incentives and support companies engaged in the manufacturing of silicon semiconductor fabs, display fabs, compound semiconductors/silicon photonics/sensors (including MEMS) fabs, semiconductor packaging (ATMP/OSAT), and semiconductor design. Among other objectives, India wants to set up at least two greenfield semiconductor fabs and two display fabs.
- To ensure a boost in the semiconductor industry, the Union Budget of 2017-18 increased the allocation for incentive schemes, such as the Modified Special Incentive Package Scheme (M-SIPS) and the Electronic Department Fund (EDF), to US$111 million.
- To ensure further investments in the industry, create employment opportunities, and reduce dependence on imports by 2020, the government amended the M-SIPS by approving new incentives for investors, worth US$1.47 billion.
- The MeitY has planned to revise its policy framework, to develop the industry by providing initial capital that is meant to attract more private players and push India to become a global hub for semiconductors.
- The government of Telangana has planned to launch T works, India’s largest prototyping center, in Hyderabad for the purpose of acting as a prototyping center for semiconductors.
- The government of Gujarat has planned to set up a new electronics manufacturing hub in the state, following the launch of its electronics policy in 2016, and is expected to generate around 500,000 jobs in the electronics sector in the next five years.
- The federal government has set up an empowered committee for manufacturing in high technology areas, which will be headed by the minister of Commerce and Industry, and notable people from the Indian industry, including Tata Sons chairman N Chandrasekaran, Bharat Forge Chairman Baba Kalyani, Mahindra Group managing director and CEO Pawan Goenka, Zoho Corp CEO Sidhar Vembu, and semiconductor expert Anshuman Tripathi.
- In 2016, an electropreneur park was inaugurated at the University of Delhi’s (DU) South Campus to incubate 50 early stage start-ups and lead to the creation of at least five global companies over a period of five years.
- The government has approved a Scheme for the Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and a Production Linked Incentive (PLI) scheme for 13 critical sectors like telecom, automobiles, etc.
This article was originally published on April 6, 2021. It was last updated June 1, 2023.
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