Semiconductor Majors yet to Land in India, More Rounds to Lure them will be on Offer, says Minister

[ABS News Service/25.02.2022]

With the Internet of Things (IoT) and 5G becoming trending technologies in India, demand for semiconductor chips is estimated to increase over $100 billion by 2025. India’s semiconductor demand is currently totally fulfilled by imports but there is a need to incentivise the value chain in order for India to become economically self-sufficient and technologically advanced.

The Union Cabinet last December approved the Semicon India Programme with an outlay of Rs 76,000 crore to broaden and deepen electronic manufacturing, and enable the establishment of a robust and sustainable Semiconductor and Display ecosystem in the country.

The first round of applications for the development of semiconductor and display fabs (a facility to manufacture advanced electronic products) was opened on February 15 this year. Despite the scheme’s tight timescales for application submission in the segment of semiconductor and display manufacturing, it has received a positive response.

Union Electronics and IT Minister Ashwini Vaishnaw told CNBCTV18 that in the second round of the Semicon India Programme, more proposals for setting up semiconductor chip production facilities are expected.

“On December 15, 2021, the government approved the programme for the development of the semiconductor ecosystem. From January 1 onwards, we started taking the applications and the response we have received is very good. We are happy as serious applicants have come," said the minister.

The India Semiconductor Mission, which was established as a dedicated entity for the Semiconductor India Programme, has received five applications for Semiconductor and Display Fabs totalling $20.5 billion in investment (Rs 1,53,750 crore).

There are three businesses that have applied for semiconductor fabs: Vedanta in a joint venture with Foxconn, IGSS ventures and ISMC. Applications have been submitted for the construction of 28 nm to 65 nm semiconductor fabs with a monthly capacity of around 1,20,000 wafers and a planned investment of $13.6 billion, including nearly $5.6 billion in fiscal support from the Central government.

The India Semiconductor Mission (ISM), which was established as an independent agency to spearhead the overall programme, has awarded acknowledgement to the applicant businesses under the Semiconductor and Display Fab Schemes. The agency will work with the applicants, who have also approached states in order to gain access to world-class infrastructure.

It will collaborate closely with state governments to construct high-tech clusters with 300 to 500 acres of developed land, 100 KVA power, 50 MLD water, natural gas supply and shared testing and certification facilities.

Vaishnaw told CNBC TV18: “We have to look at the entire ecosystem. We have received applications for silicon fab, for display fab, for compound semiconductors, for ATMP/OSAT and finally, for design. So despite such a short period that we gave to applicants the response is good."

Big Player in Semiconductor Sector

When asked about the big players in the semiconductor segment such as Intel, Samsung, Taiwan Semiconductor Manufacturing Company (TSMC), Micron, as well as Infineon, and if the sector’s major companies will submit bids, the minister responded that they would in the future rounds.

“We have given a 20-year roadmap for semiconductor development. It is an industry that requires a long-term commitment from the government and the industry. This is just the first round," he said.

According to Vaishnaw: “There are many other applicants who are seriously considering because of the way we designed this entire plan. We also have 85,000 semiconductor engineers and there is very good progress on that front also. So, the interest from many other players is there."

While talking about the big players the minister also noted that the plan is being evaluated by significant corporations and the government hopes to see more in the following phase.

In terms of these big names in the field of semiconductor manufacturing, earlier it was reported that India and Taiwan have reportedly begun talks for a free-trade agreement and setting up a semiconductor manufacturing hub in an Indian city. Last year, it was also reported that the Indian government has already proposed a few locations for the facility and one of Taiwan’s premier semiconductor manufacturers, such as TSMC and United Microelectronics Corporation (UMC), may be chosen to carry out the massive undertaking.

But as of now, there has been no news regarding the confirmation of setting up a Taiwanese chip-making plant in India. But TSMC announced that it would form a joint venture with Sony to develop its first Japanese chip plant in Kumamoto, in the western prefecture of Japan.

Similarly, while the South Korean giant Samsung showed interest to expand internationally, last year Samsung Electronics announced that it would build a new semiconductor manufacturing facility in Taylor, Texas. So far there is no update about its plan for expanding in India.

Additionally, Intel reportedly expressed interest in establishing a new plant in India. According to reports, the semiconductor manufacturing giant was expected to apply for incentives under the new scheme to encourage the development of a sustainable semiconductor and display ecosystem.

The interest of netizens grew significantly after Vaishnaw welcomed the company to India by tweeting “Intel- welcome to India", following a tweet by Randhir Thakur, senior vice-president and president of Intel Foundry Services.

In a tweet by Thakur, on December 27, he congratulated MeitY, Vaishnaw and Rajeev Chandrasekhar, Minister of State for MeitY while saying: “Congrats to @GoI_MeitY @AshwiniVaishnaw @Rajeev_GoI for Semiconductor design & manufacturing incentives for India as hub for electronics & semiconductors. Glad to see a plan laid out for all aspects of the supply chain: talent, design, manufacturing, test, packaging & logistics."

But so far Intel has not revealed any details about its plans for India. News18 contacted the tech giant but it hasn’t yet responded to the queries regarding the roadmap.

Focus is on Execution

During the interview, Vaishnaw clearly stated that currently, the government’s focus is on the “execution" of the programme.

“The applications that we have received so far, we must execute them well and that will create the confidence about India’s capabilities. Because it is a very complex supply chain—the supply chain of chemicals, the gases that are needed, the ultra-pure water that has to be manufactured—all that has to be proven and demonstrated to the world for many more applicants to come." the minister noted.

“Our focus right now is to clearly execute on what we have promised and the response that we have got, that way we have enough on our table to execute the first round. Then the second round can happen subsequently," he stated while clarifying that it would be difficult to confirm a particular time frame for the second round.

However, according to him going forward, now the authorities will first evaluate all the applications received so far and make sure that the structure the companies have proposed is aligning with the module the government has designed in the scheme documents.

“Secondly…wherever we create a fab the ecosystem has to develop around it, so that the people who are going to consume those semiconductor chips, they must also be able to set up their facilities close by. So we are looking at that kind of cluster approach," Vaishnaw said while adding that the government will make sure that all the approval needed should be achieved within a short time period.

When asked about the collaboration between the state government and Centre, the minister said, “We did a lot of pre-work with many state governments, and we had requested all of them to come up with their proposals."

“We have proposals on the table from about 8 state governments, different locations, different types of water and power facilities, as well as transportation facilities, so a lot of groundwork has been gone into this project," said Vaishnaw while mentioning the names of Uttar Pradesh, Gujrat, Karnataka, Tamil Nadu, Telangana, Odisha and Madhya Pradesh, all of which have given options for the ecosystem.

“We are looking at a time frame of about 8 to 10 months, in which we should finalise everything, including scheme approvals, land and power facility approvals and finalizing the site," he added.

When asked whether the work on the ground can be started at some point in early 2023, Vaishnaw said, “It is a bit aggressive target but yes I think we as a nation need to work at that speed."