India Approves First Semiconductor Fab Facility in Gujarat ($15 Billion Investment)

India has recently made a notable move in the global semiconductor industry by approving an allocation of up to $15.2 billion (1.26 trillion Indian rupees) for the construction of three new semiconductor plants. This initiative includes the country’s first semiconductor fabrication (fab) facility, signaling India’s ambition to compete with major players like China and Taiwan in the chip manufacturing sector.

The Indian cabinet has greenlit the establishment of the first semiconductor fab facility, a collaboration between the Tata Group and Taiwan’s Power Chip. This facility will be located in the Dholera region of Gujarat. It is expected to produce 50,000 wafers per month and aims to manufacture 3 billion chips annually.

These chips will cater to various market segments, including high-power computers, electric vehicles, telecommunications, and power electronics.

Ashwini Vaishnaw, the Indian IT minister, announced that construction for the semiconductor fab is set to begin within 100 days. The typical construction period for such a facility is three to four years, but efforts are being made to significantly compress this timeline.

In an effort to attract chipmakers and display manufacturers to establish local facilities, India had previously launched a $10 billion incentive program. This program offers incentives of up to 50% of capital expenditures to companies setting up domestic manufacturing projects.

The scheme required modifications last year due to low engagement from international companies, attributed to a complicated application process and skepticism about India’s readiness in terms of skilled labor and other necessary conditions.

Despite efforts to attract major global players like TSMC, Qualcomm, MediaTek, and Intel, these companies were notably absent from the recent announcements. The new semiconductor units are expected to create 20,000 advanced technology jobs and about 60,000 indirect jobs. However, AI chips are not currently a focus in these developments.

The Indian government has also outlined $7 billion in incentives for the three newly announced semiconductor plants and the $2.75 billion Micron facility, announced during Prime Minister Narendra Modi’s visit to the U.S. last year. Micron has committed an $825 million investment for its facility.

India is actively seeking to attract foreign semiconductor manufacturers with these incentives, with companies like Foxconn and AMD already announcing their investment plans for setting up local facilities.

Minister Vaishnaw stated that the government plans to design its semiconductor program for 20 years, leveraging the country’s 300,000 design engineers already working on chip designs for global companies. He hinted at various other semiconductor initiatives by the government in the near future.