The government expects around three proposals from the industry for setting up semiconductor fabrication units worth $8-12 billion in the next couple of months, communications and IT minister Ashwini Vaishnaw said on Tuesday. However, he did not disclose the names of the companies which are likely to submit their applications in this regard.
Speaking to the media after inaugurating the largest global design centre of US-based chipmaker, AMD, Vaishnaw said that several companies are talking to different state governments like Karnataka, Telangana, Tamil Nadu, Gujarat and UP,and in the coming months, will be finalising their plans locations where they will be setting up their units.
“This nascent industry will grow as a major contributor to the manufacturing base of telecom and defence sector of the country,” the minister said. “We have always focused on ecosystem. Many of the partners of ecosystem have started coming after the construction of the first unit started. Substrate manufacturers, chemical suppliers, PCBA (printed circuit board assembly) people, and other parts of the ecosystem have started setting up. That’s the first part,” he added.
Last week, Murugappa Group’s CG Power and Industrial Solutions submitted its application to the ministry of electronics and IT for setting up an outsourced semiconductor assembly and test (OSAT) facility with an investment of $791 million over a five-year period. The entity will package and transport chips manufactured by third parties.
As per the process, only those companies whose applications are approved by the government are entitled to get a 50% subsidy from the government on the project cost. State government where the projects are set up are free to top this up with any subsidy amount they want.
Earlier this year, the government approved the US-based Micron’s $2.75 billion chip assembly and packaging unit at Sanand in Gujarat. The company did the ground-breaking ceremony in September. Apart from getting 50% subsidy from the Central government, Micron has got a top-up subsidy of 20% from the Gujarat government. As a result its actual investment will come down to $825 million.
As on October end, under its Rs 76,000-crore semiconductor and display manufacturing scheme, the government has received a total of forty-five applications. This includes five applications for setting up semiconductor fabs, two applications for display fabs, nine for setting up compound and ATMP facilities, and twenty-nine for design linked incentive scheme.
Under the ATMP (assembly, testing, marking and packaging) scheme, so far, only Micron’s proposal has been cleared while seven applications have been approved under the design linked incentive scheme.
Vedanta and Foxconn have also separately applied to establish semiconductor fabrication units in the country.
Vaishnaw had earlier told Fe that there’s demand of 2 trillion chips in the country, which will increase to 5 trillion in the next few years. He had also said that the first made in India chip under Micron’s project will be rolled out by December, 2024, and annual production worth $1 billion is expected once its plant is fully operational.
He had said that six more semiconductor projects will come up in the next one year.