The Karnataka government said at the weekend that a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor, the International Semiconductor Consortium (ISMC), will invest $3 billion in the southern state to build India’s first chip manufacturing plant.
This news comes after the SemiconIndia Conference 2022 ended on May 1 which began on April 29 with an aim to serve as a springboard for India’s aspiration to become a worldwide semiconductor hub and to nurture the chip design and manufacturing ecosystem.
The latest announcement by Karnataka state authorities implies that the government’s incentive system to turn India into a semiconductor hub is starting to bear fruit. According to a tweet from the state’s investment promotion office, India’s first semiconductor fabrication unit is estimated to create more than 1,500 direct jobs and 10,000 indirect ones.
American chip giant Intel recently revealed its intention to buy Tower Semiconductor.
Karnataka’s chief minister’s office shared a tweet on May 1 in which it said: “Karnataka Government and ISMC @BSBommai Fab Pvt Ltd signed a memorandum of understanding for the construction of the country’s first semi-conductor Fab Plant in Karnataka today.”
According to the tweet, the memorandum of understanding was signed by the founder and managing partner at Next Orbit Ventures, Ajay Jalan, in the presence of Karnataka CM Basavaraja Bommai and other government officials.
“This MoU is significant amid the competition among various states to attract semiconductor fabrication units. Karnataka understands that it’s not just the fiscal incentives that matter but the availability of conducive ecosystem and overall ease in operations are also important,” said CM Bommai.
However, for the plant, the chip makers’ consortium has asked 150 acres of land in Mysuru’s Kochanahalli Industrial area.
ISMC and Vedanta, a domestic metals-to-energy conglomerate, have applied for India’s incentives for semiconductor and display businesses to set up facilities in the country.
Meanwhile, Vedanta reportedly said that it was in “advanced” discussions” with Gujarat, Maharashtra, and Telangana to select a site by mid-May. It intends to invest $20 billion in its semiconductor and display initiatives.
IT minister, Ashwini Vaishnaw, while addressing SemiconIndia India 2022 said that by next year April or May India may see its first semiconductor unit.
During the conference, the minister also said: “We understand that many countries are offering incentives. But what we offer, along with substantial incentives, is a commitment to create and augment our talent pool by 85,000 semiconductor professionals over the next ten years.”
“These will be industry-ready professionals and we have already tied up with global institutions,” he added.
Separately, union finance minister Nirmala Sitharaman, during her recent visit to the United States, urged American semiconductor companies such as AMD, Western Digital, and Micron Tech to increase their investments in India, taking advantage of a Rs 76,000-crore production-linked incentive (PLI) scheme for multinational chip makers.
The central government has also asked GlobalFoundries and Taiwan Semiconductor Manufacturing Co (TSMC) to expand their operations in India.
However, despite the fact that the government has yet to finalize the PLI scheme’s beneficiaries, sources from the ministry of electronics and IT say the final selection of companies will be made after a thorough examination of all factors, including investments, and technology partners, and manufacturing roadmaps.
The Center will provide financial support of up to 50% of project cost for at least two semiconductor and two display fabs for a minimum of six years under the production-linked incentive plan. Others, such as compound semiconductors and sensor fabs, will receive a 30% tax break.
From $15 billion in 2020, India’s semiconductor The market is expected to expand to $63 billion by 2026.
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