India Pays 70% for US Company to Own 100% of Semiconductor Plant: Why?

Micron to Break Ground for Semiconductor Plant in India on 23rd

These facilities will significantly contribute to employment generation — an estimated 5,000 direct jobs and an additional 15,000 to 20,000 indirect jobs will be created.
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Introduction:

Micron Technology is preparing to commence construction for its semiconductor plant in Sanand, Gujarat on September 23, as reported by The Economic Times. This development comes three months after the chipmaker revealed its intentions to establish a unit in India. Anticipated to be operational by late 2024, the facility represents a significant move for the United States-based company, which ranks as the world’s fifth-largest in semiconductors.

Micron invested $825 million in India for this project. The plant’s total cost is $2.75 billion. Micron covers a significant share, with subsidies from Central and state governments filling the rest. This project is a key milestone, the first mega project under the $10 billion incentive scheme.

Let’s explore why this is a game-changer for India’s tech landscape.

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First leg of Production:

A few months back, Micron strategically acquired 10 acres of land, a building, and a factory from a struggling auto components manufacturer. Consequently, this facility is presently undergoing a transformation into a pilot Assembly, Testing, Marking, and Packaging (ATMP) plant.

The ATMP plant plays a pivotal role in the semiconductor manufacturing process. Here, silicon wafers are transformed into memory chips. It incorporates a “cleanroom” environment, meticulously maintained to minimize dust and vibrations. This controlled setting allows wafers to undergo approximately 30 to 40 intricate processes, including etching. Once the chips are completed, they are forwarded to a back-end assembly and test facility before being packaged and made ready for sale.

This marks the initial phase of Micron’s semiconductor venture in Sanand and holds significant importance as it aligns with India’s objective of actively participating in the global chip race, a vision underscored by the government as imperative for future technology-driven progress. In the subsequent phase, all testing operations will take place on-site, with only the wafers being imported. This major leap forward is slated to commence at the expansive greenfield plant from December 2024.

Ashwini Vaishnaw, the Minister for Railways, Communications, Electronics, and Information Technology, had previously emphasized this goal. He highlighted that the government envisions the inaugural “Made-in-India” chip to be produced by December 24, underlining the ambition and urgency of this transformative endeavor.

Read more: Is India even serious about Semiconductor manufacturing?

Second leg of production:

In the next phase, merely a kilometer away from the first facility, Micron has acquired an expansive 93-acre plot from the government. Here, Micron is set to establish a cutting-edge greenfield Assembly, Testing, Marking, and Packaging (ATMP) plant. This ambitious project is estimated to take 18 months and incur a cost of $2 billion, with a substantial 50 per cent subsidy on the land’s price granted by the Gujarat government.

At the heart of Micron’s dual installations in Sanand lies the meticulously maintained cleanroom, encompassing an impressive 1 million square feet — ranking among the largest globally for an ATMP plant. The critical criterion for this space is its stringent maintenance of a dust-free environment, ensuring the sophisticated machinery doesn’t reject the wafers. The standard requirement mandates the upkeep of just 1,000 small particles per square meter, a mere tenth of the norm for an operation theatre.

Despite the high degree of automation, these facilities will be a significant source of employment generation. Moreover, they are expected to create an estimated 5,000 direct jobs and an additional 15,000 to 20,000 indirect jobs. Consequently, this renders their employment impact comparable to that of a passenger car factory.

Read more: India’s Semiconductor Future Brightens: $1.1B Invested, 10 Major Milestones Reached in 1 Year

There are 5 reasons why This could spark a semiconductor revolution in India

1. Largest Foreign Investment in Indian Semiconductor Sector:


Micron’s plant investment of $2.75 billion is a watershed moment for the Indian semiconductor industry. Notably, it’s not only a massive financial commitment but also a resounding vote of confidence in India’s capabilities and potential. Furthermore, this landmark investment surpasses any previous by a foreign company in the Indian semiconductor sector, establishing a new precedent and reinforcing India’s position on the global tech map.

2. Job Creation and Economic Growth:


Micron’s new plant profoundly impacts employment and the economy. Moreover, the project will create a multitude of jobs, both directly and indirectly. This will result in an estimated 5,000 direct jobs and over 20,000 indirect jobs, significantly boosting the local economy in Sanand, Gujarat, and beyond. Consequently, this influx of employment opportunities will enhance the standard of living and foster a culture of innovation and growth in the region.

3. Reducing Dependency on Semiconductor Imports:


India currently imports over 90% of its semiconductor requirements, leaving the nation vulnerable to supply chain disruptions. However, with Micron’s new plant, a strategic move is underway to alleviate this overreliance on imports. Consequently, producing semiconductors domestically will fortify India’s supply chain resilience. Furthermore, this will significantly reduce its dependence on foreign markets, ensuring stability and autonomy in this critical sector.

4. Elevating India’s Position in the Global Semiconductor Industry:

The global semiconductor market is a multi-billion-dollar industry, and India aims to claim a significant share. Micron’s substantial investment signals India’s intention to position itself as a dominant player in this competitive arena. As the country continues to enhance its manufacturing capabilities and technological prowess, it will garner international recognition and emerge as a key contributor to the global semiconductor landscape.

5. Inspiring Future Foreign Investments:


Micron’s commitment to investing in India serves as a beacon, illuminating the path for other foreign investors. This groundbreaking event is likely to inspire and encourage additional foreign companies to explore opportunities in India. Foreign direct investment will boost India’s economy and foster innovation. It will make India more attractive as an investment destination.

Conclusion:


Micron’s groundbreaking in Gujarat, India, is monumental for the semiconductor industry. It brings substantial financial investment and signifies a new era of growth and tech advancement. India is ready to stand out in the global semiconductor arena, promising economic growth, jobs, and innovation nationwide.

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