More than one Indian Federal government has wanted chips to be "Make in India". Monies for development and subsidy have been offered to many. The offers will need to be made better. Global competition for high-end chip plants is brutal and a cyclic industry makes things worse.
The concerns of global semiconductor makers before siting a facility can take decades to satisfy. Growth in semiconductor capabilities in Israel started with small scale foreign direct investment in the 1970’s and has grown over decades before receiving news of a large fabrication facility to be constructed in country. Intel has selected Israel for a USD$11B facility to employ 1000 workers in the future with subsidies of USD$1B. The global competition to attract design and fabrication facilities requires monies challenging even to first world countries like Germany and the United Kingdom.
The USD$10B on offer across India may need to be even larger to compete as barriers include water, electricity, and supply/logistics chains. The "Modified Programme for Semiconductors and Display Fab Ecosystem" has incentives for up to 50% of capital spend. Putting in a large facility takes more than one factory of incentives. India does not currently have the materials suppliers, production equipment manufacturers, or available domestic consumers of global-scale production. Current efforts look to a leading manufacturer to “drag along” all of these capacities and capabilities. A Dynamic India might invest in the civil and industrial infrastructure to become more attractive.
In a recent round of international talks India has sought to attract key global tech players. Groups of enterprises have had serious talks. (Intel/Tower and ISMC; Foxconn and Vedanta JV; and IGSS Ventures Singapore)) None have come to a major commitment to design and manufacture leading edge chips in India. Tower Semiconductor’s ongoing merger by Intel has halted its consideration of an investment in India. Vendanta and Foxconn have announced they are not going forward with their Joint Venture proposal. Foxconn is considering other partners and offers. IGSS Ventures is still constructing a final proposal for incentives.
Micron Technology has committed to a testing and packaging plant in Gujaret, India (USD$825M across all Phases). Capabilities are for ball-grid-array (BGA) packaging, memory modules, and solid-state drive modules. Construction of Phase I is starting in 2023 with early operations in late 2024. Later Phases of the project will expand in the late 2020’s. Micron will get 20% as incentives from the State of Gujaret and 50% as support from the Federal government for a total of up to USD$2.75B. Job creation is estimated at 5000 in the facility with 15000 more in the community. This points to an additional barrier for any other new facility. Employment of highly skilled, and paid, workers in a semiconductor fabrication facility is much smaller for the capital amounts invested. The Micron Technology project is aware of some of the risks EkaLore has highlighted as it looks to use advanced water-management tech to enable “Zero Liquid Discharge”. Electrical power generation capacity to support the plant is a likely constraint as operations scale.
Multiple estimates of the semiconductors required in the Indian domestic economy point to a growth to USD$60-$80B before 2030. The elapsed time to bring up even a modest new semiconductor plant raises the risks from inflated costs, industry cycles, and technology changes. Lead times mean a factory project is started in one cycle and operates in the next one. To bring up a multi-product set of semiconductor design and manufacturing operations for India before 2030 will be a great challenge to a Dynamic India.
For more of EkaLore’s looks at a Dynamic India see our releases at http://www.ekalore.com/india-business
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