Centre targets global majors for semiconductor fabrication plants

The move comes after MeitY floated an expression of interest from global as well as Indian joint ventures last December. The deadline for companies to submit a preliminary project report is March 31
In an ambitious move, the government is targeting global leaders for setting up semiconductor fabrication (fab) plants in the country. 

The Ministry of Electronics and Information Technology (MeitY) is coordinating the effort and has drawn up a target list of potential companies.

They include Taiwanese majors Taiwan Semiconductor Manufacturing Company, VIA Technologies Inc., and United Microelectronics Corporation, US giants Intel, Micron Technology, Inc., NXP Semiconductors, and Texas Instruments, Japanese players Fuji Electric Co. and Panasonic, European chipmakers Infineon Technologies AG and STMicroelectronics, and South Korean SK hynix Inc. and Samsung.

The move comes after MeitY floated an expression of interest from global as well as Indian joint ventures last December. The deadline for companies to submit a preliminary project report is March 31.

MeitY is also targeting leading global companies under the recently announced production-linked incentive (PLI) scheme for information technology hardware. It plans to offer incentives between 2 per cent and 4 per cent for five players making laptops (over $400), tablets (over $200), apart from servers and personal computers in India.

The global companies it has targeted include Taiwanese giants Quanta Computer Incorporated, Foxconn, Acer, Asus, and Inventec Corporation, US-based Dell, Apple, Cisco Systems, Inc., and Flex, apart from Indian companies which include Coconics and HLBS Technologies, among others. The outlay for the PLI scheme has been fixed at Rs 7,350 crore. 

The government is looking at a fab plant on three levels. It is seeking preliminary interest from integrated design manufacturers, foundries or a consortium with an Indian company to set up a new fab plant, or expand an existing one.

This plant will use complementary metal oxide semiconductor technology — an advanced method of making integrated circuits — to manufacture processors, memory integrated circuits with a capacity of 30,000 wafer starts per month and a wafer size of 300 millimetre (mm).

At the second level, MeitY seeks players with the same qualifications to set up a semiconductor unit of emerging technologies with a wafer size of 200 mm.

At the third level, it is interested in Indian companies which are part of a consortium that wants to acquire a semiconductor fab unit in India.

While the government has yet to decide on the financial package it will offer potential players, MeitY expects the fiscal support for semiconductor and display-focused ion beam technology, as well as domestic fabless product companies and the Internet of Things devices and wearables, could be to the tune of $5 billion.

The government has asked potential investors what kind of financial support they require from it, whether it is grant-in-aid, viability gap funding in the form of equity or long-term interest-free loans, tax incentives, or infrastructure support. It has also asked them to specify the support they will need from states.     

Interested companies have also been asked to give details of their investment and technology specifications. Based on these details, the government will devise a scheme for them to set up a manufacturing plant.  

This is not the first time India has looked to create such a plant here.

In 2007, a certain buzz broke out around Intel planning to set one up but in the end, it switched to China and Vietnam because it believed the government’s policy was not thought through.

Then in 2013, the government gave the go-ahead to two proposals, one led by Jaypee Group and the other by Hindustan Semiconductor Manufacturing Corporation. Both were backed by a substantial government subsidy for the project cost.

But they too failed to take off, despite both companies initially touting figures of investments totalling over Rs 25,000 crore.

This time round, given the government’s huge push to make India a global hub for electronics system design and manufacturing (backed by production incentives), the outcome might be different.

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