After announcing its plan to set up a chip assembly and packaging unit in India, Micron Technology would next establish a semiconductor manufacturing unit in the country as part of a natural evolutionary process, communications and IT minister, Ashwini Vaishnaw told Fe in an interview on Friday. Once that happens the company will have an end-to-end semiconductor manufacturing chain in India.
This would be a major development as currently Micron has chip manufacturing unit at only two locations – Japan and China.
Speaking a day after the US-based firm announced its plans to set up a $2.75 billion chip packaging (assembly, testing, marking, packaging) unit in the country, Vaishnaw said that the first made in India chip under the project will be rolled out by December, 2024, and annual production worth $1 billion is expected once the plant is fully operational.
He also said that six more semiconductor projects will come up in the next one year.
Separately, Vaishnaw said that very soon some of the global information technology majors will also announce their investments under the modified IT hardware production-linked incentive scheme.
Vaishnaw said that semiconductor units which will come up post the Micron plant, will be combination of assembly, packaging and manufacturing. “We are focussing to build a complete semiconductor manufacturing ecosystem in the country. It is a natural process that first assembly, testing, marking, and packaging (ATMP) comes and then we move beyond to higher fabs,” Vaishnaw said.
He said that when an ecosystem develops, manufacturing as well as ancillary industries develop, as happened in the automobile sector. The same will happen in the semiconductor industry also.
Explaining the nature of Micron’s operations at the packaging unit, which will come up in Gujarat, Vaishnaw said that the wafers, which is the raw form, is manufactured by the company at its Japan and China units. These would be brought to the India unit, where they would be processed into chips, packaged and then transported globally to industries which use semiconductor in their products. “Processing of wafer into chips is a complex process, which will be done by Micron at its upcoming unit in Gujarat,” the minister said.
Vaishnaw said that the government has not set any time frame for Micron to set up a raw wafer manufacturing unit in the country. “We won’t be giving them any time frame to start manufacturing raw wafers in the country. We want to become the capital of the semiconductor industry and for that our approach is very comprehensive,” he said, adding that the focus is on building the foundation of the semiconductor industry, which is today the foundation of other industries.
While Micron will only process wafers produced by it, other packaging units which would come up in India may have a mixed business structure – some may process only their own produced wafers, while others may get global orders from third parties to process them.
When asked if there’s a plan to increase the $10-billion (Rs 76,000 crore) outlay for the semiconductor incentive scheme, Vaishnaw said that the government is open to modifying the incentive programme and go beyond $10 billion if the industry needs such support. “However, one should also note that once the industry becomes self sustainable then it does not require that kind of incentives. Ecosystem will develop automatically,” he added.
As part of the Rs 76,000-crore incentive scheme, the government provides 50% subsidy to firms which evince interest in setting up any form of semiconductor units and qualify as per the laid down norms. State governments where the firms concerned decide to put up the units can top it up with their own subsidy. In the case of Micron, the Gujarat government is providing an additional subsidy of 20%. As a result, of the total investment of $2.75 billion, Micron will have to spend only $825 million.
Apart from the Micron project, the government has also approved a $400 million project by Applied Materials for setting up engineering centre to develop components for manufacturing semiconductor equipments. Similarly, in a bid to push research and development, Lam Research will launch a programme to train 60,000 workforce for the semiconductor industry.
On Vedanta-Foxconn’s plan for setting up a semiconductor manufacturing unit in the country (also in Gujarat), Vaishnaw said the government has asked them to resubmit the application under the modified scheme.
The advantage with companies like Micron which are into semiconductor manufacturing is that they do not need technology partners, but newer companies getting into this business, like Vedanta-Foxconn, need to have technological partnership with firms having expertise in this field.