Government in talks with multiple semiconductor companies for major investments over the next one year: Ashwini Vaishnaw

“From our understanding, we are expecting anywhere between two and six good proposals over the next 12 months. As for the investment, it could be around or slightly more (than the Micron investment), depending on the technology that they bring in,” Vaishnaw told ET.

On Friday, US memory-chip maker Micron Technology announced it would set up an outsourced semiconductor assembly and testing plant at Sanand in Gujarat entailing an investment of $2.75 billion. Of this, Micron will invest $825 million, while the rest will be a combination of incentives from the central and state governments.

Vaishnaw spoke to ET before the announcement on Micron’s project was made.

The investment by Macron, Vaishnaw said, is likely to encourage more companies to come to India as it reflects on the Centre’s approach of building a complete semiconductor ecosystem instead of working to bring just chip fabrication units.

Two major companies are already in advanced stages of talks with the government on aspects such as the location to set up units and the technology they plan to bring to India. “These companies will take their own calls on whether they would like to apply in the same format (under the India Semiconductor Mission), the node they plan, the technology partners,” he said.

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“A complete ecosystem involves the semiconductor unit itself, design, getting the suppliers of chemicals, gases and all other compounds, equipment manufacturers and talent in place. Many were willing but waiting for the development of the ecosystem. They will be encouraged now,” Vaishnaw said.Apart from Micron, Applied Materials, the world’s leading maker of precision equipment, has announced its intent to invest more than $400 million to set up a collaborative engineering centre in Bengaluru. The company plans to develop sub-systems and components used for semiconductor manufacturing, apart from developing talent for the semiconductor industry.

Lam Research, a global leader in innovative wafer fabrication equipment and services to the semiconductor industry, has announced plans to train 60,000 semiconductor engineers over the next 10 years in India.

These three investments are likely to result in the creation of up to 100,000 direct jobs in the semiconductor ecosystem in India, minister of state for electronics and information technology Rajeev Chandrasekhar said at a press conference later in the day.

“It will be difficult to estimate how many indirect jobs will be created in the semiconductor supply chain ecosystem. What is absolutely clear, however, is that the direction we are headed in, there will be ample opportunities for entrepreneurship and startups in this space,” Chandrasekhar said.

Micron, the world’s fifth largest semiconductor manufacturing company, will set up a unit to test and package memory chips which are likely to be used in mobile phone, laptops, servers, telecom equipment and electric vehicles.

The company has already received its land allocation approvals, is ready with a construction design blueprint and a construction agency is also likely to be soon shortlisted and announced by Micron, Vaishnaw said, adding that the company should be able to start production within the next six quarters.

The Micron unit is being set up under the India Semiconductor Mission’s Modified Assembly, Testing, Marking and Packaging Scheme. The government announced the incentive scheme of Rs 76,000 crore in December 2021 to encourage setting up of a semiconductor manufacturing and fabrication ecosystem in India.

While initially the scheme proposed to give incentives depending on the technology, it was revised in October last year to give a flat 50% incentive to all players, irrespective of the technology and the nature of the facility.

Between January 1 and February 14, 2022, when the 45-day window for companies to apply under the India Semiconductor Mission was open, the government had received three applications, one from a Vedanta-Foxconn joint venture, and the other two from Next Orbit Ventures, which has partnered with Israel’s Tower Semiconductor, and Singapore-based IGSS Ventures.

All these applicants, including Vedanta-Foxconn, have been asked to re-submit their applications after considering the modifications that the government introduced in the ISM earlier this year in May, Chandrasekhar said.

“Those are under appraisal. We tweaked the policy slightly to accept applications even for mature nodes. We believe that these companies will resend their modified applications in days to come,” he said.

Micron’s decision to invest in India is also likely to bolster the country’s image as an alternative destination to expand the supply chain in the region, Vaishnaw said, adding that the semiconductor ecosystem would “feed well” into the mobile and electronic equipment manufacturing supply systems.

“Not just us, the entire industry had a learning in the last 12 months that mature nodes are as important as leading nodes. That thinking is reflected in the modifications we have done. We will be expecting players in this mostly,” he said, adding that the presence of these companies would also hedge their concerns on supply chain disruptions.