Micron to invest $2.7B to set up chip packaging unit in India

The Indian government has approved US-based Micron Technology's plans to invest $2.7 billion to set up a chip assembly testing and packaging unit in Sanand in the state of Gujarat in Western India.

The government would be providing Production Linked Incentives (PLI) of around 110 billion Indian rupees (US$1.34 bn) for Micron’s Outsourced Semiconductor Assembly and Test (OSAT) plant. Media reports suggest it is likely to create 5,000 jobs.

The announcement comes close to the Indian Prime Minister Narendra Modi's ongoing first state visit to the USA. Prime Minister Modi also met Micron CEO Sanjay Mehrotra during his US tour and invited the company to set up a unit in the country. Interestingly, he also met Gary E. Dickerson, president and CEO of Applied Materials.

India and the US have signed a Memorandum of Understanding (MoU) at India-USA 5th Commercial Dialogue 2023 to jointly build a chip supply chain and reduce dependency on China.

India's chip ambitions

The Micron deal is a sign of changing global dynamics. On one end, US companies are under pressure to move their manufacturing operations out of China and on the other end, India is trying to gain competencies in the specialized field of chip manufacturing.

The Indian government has announced ambitious plans to appeal to the chip makers to set up a base in the country. While Micron would only be setting up a chip testing and packaging unit and not manufacturing semiconductors, it is a step forward for the country.

India had received applications from a Vedanta-Foxconn joint venture, IGSS Ventures and ISMC in response to its INR760 billion ($9.2 billion) India Semiconductor Mission scheme. However, none of the applicants was able to close a deal with their technology partner, leading the government to invite applications again in May.

Micron, meanwhile, was recently in the news for a failed security review in China, which led to the company being banned from participating in critical infrastructure projects. This seems to be in response to the US government barring American telcos from using Huawei's gear.

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— Gagandeep Kaur, Contributing Editor, special to Light Reading