India Takes a Step Closer to Chip Self-Reliance

India is poised to achieve a major milestone in its technological advancement journey with the upcoming launch of its first semiconductor fabrication plant. The move is expected to boost the nation's efforts towards achieving chip self-reliance, reducing dependency on imports, and fostering innovation in the semiconductor industry.
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Introduction:

India is on the verge of announcing its inaugural semiconductor fabrication facility, a strategic move to reduce reliance on chip imports and boost self-sufficiency in the wake of pandemic-related supply chain disruptions and ongoing US semiconductor restrictions to China. Indian IT Minister Ashwini Vaishnav stated that the country’s conducive policies and government-driven efforts to strengthen the manufacturing ecosystem position India to nurture a flourishing chip industry within the next three to four years. Three entities—Vedanta-Foxconn joint venture, International Semiconductor Consortium (ISMC), and Singapore’s IGSS Ventures—are competing for financial support under India’s $10 billion incentive scheme, with decisions expected in the coming weeks.

Promoting Local Manufacturing for Chip Independence:

India recognizes the significance of promoting local semiconductor manufacturing to decrease dependence on imports and fortify resilience against global supply chain disruptions. The pandemic-induced chip shortages and rising prices have underscored the urgency of this move. Additionally, the US-imposed restrictions on chip and chip-making equipment exports to China have contributed to curbing China’s semiconductor manufacturing and export capabilities. By encouraging domestic chip production, India aims to create employment opportunities and drive economic growth.

Prospective Fabrication Units:

The Vedanta-Foxconn joint venture aims to establish its semiconductor and display manufacturing facility in the Dholera Special Investment Region near Ahmedabad, Gujarat. Meanwhile, ISMC, comprising Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor (now owned by Intel), has signed a memorandum of understanding with the Karnataka government for a $3 billion fabrication plant in the Kochanahalli industrial area. Additionally, IGSS has selected Tamil Nadu as its factory location.

Incentives to Attract Global Chip Makers:

India is actively offering various financial and non-financial incentives to attract global companies to set up semiconductor fabs in the country amid fierce competition from China, Taiwan, and South Korea. Under the incentive scheme, India is willing to provide financial support equivalent to 50% of the construction project cost for eligible applicants with the necessary technology and capacity to execute such capital-intensive projects. Additionally, the government is collaborating with state governments to establish High-Tech Clusters with critical infrastructure components like land, semiconductor-grade water, high-quality power, logistics, and research ecosystems to facilitate the establishment of two greenfield Semiconductor Fabs and two Display Fabs in India.

India Semiconductor Mission:

In a significant step towards developing a sustainable semiconductor and display ecosystem, India established the India Semiconductor Mission, an independent agency focused on long-term strategies. The agency collaborates with other government bodies to ensure effective implementation of the country’s semiconductor initiatives.

Conclusion:

India’s impending announcement of its first semiconductor fabrication facility heralds a significant milestone in the country’s quest for chip self-reliance. Supported by enabling policies and government-driven initiatives, India’s efforts to strengthen the chip manufacturing ecosystem are well-positioned to drive economic growth, generate employment opportunities, and reduce dependence on chip imports. As India embraces local chip production, it seeks to mitigate global supply chain disruptions and stand resilient in the face of geopolitical uncertainties. With incentives enticing global chip makers to invest in the country, India’s semiconductor industry is poised for a promising future in the coming years.

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