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India Prepares to Build Nation’s First Chip Fab

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India is edging toward the construction of its first IC fab in the southwestern state of Karnataka following ISMC’s recent announcement.

The project would invest about $3 billion in a 65–nm analog chip fab, according to a statement by India’s Next Orbit Ventures, a fund management firm that aims to kickstart the effort. Israel’s Tower Semiconductor said it will be a technology provider for the project.

“If and when this project should take place, Tower will be only an integrator and a technology partner,” Tower spokeswoman Shahar Orit told EE Times. Orit declined to provide details, citing Tower’s expected acquisition by Intel. Intel also declined to comment due to the acquisition of Tower having yet to be formally approved.

Sri Basavaraj Bommai, chief minister of Karnataka, met with the ISMC team. Erez Imberman, VP of Tower Semiconductor, also attended the meeting. (Source: Next Orbit Ventures)

ISMC has requested 150 acres of land in the Kochanahalli Industrial area as part of the Indian Semiconductor Mission, pending approval by the government of India. The government would provide as much as half the cost of the fab project, depending on the process technology.

India aims to build a semiconductor industry just as nations around the world including the U.S., Europe, and Japan are proceeding with plans to rebuild their flagging chip industries. Shortages of semiconductors have caused billions of dollars of losses for companies ranging from carmakers to chip equipment suppliers.

India has been in talks with Intel, GlobalFoundries, and Taiwan Semiconductor Manufacturing Co. about setting up domestic operations to build more high–tech manufacturing in the country, according to a Bloomberg report.

Prime Minister Narendra Modi’s government in 2021 announced a $10 billion incentive package to attract flat–panel display and chip manufacturers to set up in India, which aims to replace China as the electronics factory of the world, the report said.

ISMC is not the only project to make chips in India. Mining and metals group Vedanta has signed an agreement with Taiwan’s Foxconn to start semiconductor production as early as 2025 with an investment of about $10 billion, according to press reports.

As electronics manufacturing shifts away from China, companies have been evaluating India as a new production base. Apple has started making the iPhone 13 in India as the U.S. tech giant tries to reduce reliance on its Chinese supply chain, according to a Reuters report. Apple contract manufacturer Foxconn is assembling the phones in the town of Sriperumbudur in Tamil Nadu state, according to the report.

So far, India has attracted investments by overseas and domestic chip companies that are mainly focusing on design. Continental Design India Ltd. is the nation’s only chip manufacturer, providing discrete devices such as transistors, diodes, and rectifiers.

To achieve its fab dreams and global competitiveness, India will need to attract an ecosystem of semiconductor materials and equipment suppliers — an effort that could take decades.

The Chinese government more than 20 years ago targeted semiconductors as a pillar industry, so far with little success. The government’s Made in China 2025 project — announced in 2015 — would increase the country’s chip output to 70% of domestic demand by 2025. The nation currently makes less than 20%, partly due to restrictions on imports of key production technology imposed by the U.S. government.

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