High demand for chips to make cars, computers, weapons, and consumer "toys" has caused a rush for money by enterprises. India seeks its share of factories and investments representing its huge market for all of these goods.
Global supply chains for semiconductors were disrupted by Covid-19. Governments have rushed to build ‘domestic’ supply chains away from China, Taiwan, and East Asian factories. The Asian supply chain disruptions hit many manufacturing sectors vital to governments including vehicles, aircraft, appliances, and computing. The awareness has caused an even greater willingness of governments to compete for colossal global tech enterprises.
A Dynamic India needs to build capability and capacity, matched in global competitiveness, with global enterprises. The huge capital investment, Intellectual Properties, and local talents have not been good fits with Indian resources in prior semiconductor technology generations. The government and private investors in India must decide what priorities and investment returns are critical to continued investment and operations.
EkaLore has written previously about a Dynamic India’s attempts to attract and grow high technology manufacturing capacity and capability to build a domestic industry sector. India now finds itself in competition with USA (Chip’s Act), EU, Japan, Korea, and elsewhere to gain attention and build hugely expensive (>USD$5B) factories.
Germany has been in negotiations with Intel (Euro30B) and AMD to bring very large (>Euro25B) facilities to local sites. Israel has announced a USD$25B long term investment by Intel to construct a ‘fabrication’ (fab) facility. A “smaller” investment in Poland will see a USD$4.6B plant constructed. The USA has announced various projects by Intel, AMD, TSMC, Samsung, and others with tax and project incentives with total spend exceeding USD$100B. Japan is seeing increases in fab and semiconductor production facilities.
Keys to gaining successful facility siting for all of these countries is access to three key resources:
Water (fabs will utilize up to 4M litters/hour of water with 95-97% recycling)
Power (stable electrical power at predictable prices are required to operate)
People (a workforce with sufficient skills and education to run a plant)
In many locations the hardest resource to secure is water. In the USA (Chandler AZ, Austin TX), Israel, Taiwan, and Germany (Magdeburg) water access, permits, and reuse are a critical planning consideration. Stable electrical power (energy generation) was a negotiating issue for Germany securing investment from Intel. India must be able to assure global colossal semiconductor enterprises that water and electricity are predictable and available.
There is a proposed siting by Micro Technology (HQ in USA) to bring a large packaging plant (putting already processed semiconductor wafer production into the small packages) into India. The incentives discussed range from USD$1B-2B for this facility (that requires much less water than a ‘fab’). The workforce growth for India will grow even as India has successfully launched iPhone production (an other Apple products) with Chinese outsource manufacturers. Smartphone production can be labor intensive where semiconductor fabrication and packaging are highly automated and driven by large scale capital investment.
Logistics and facilities costs have historically played roles in selecting global factory locations in competition with Malaysia, Singapore, Thailand, and other countries.
Comments