After wooing several global players, India is finally set to have its first fab unit built by Tata Group.

Gagandeep Kaur, Contributing Editor

March 4, 2024

3 Min Read
A semiconductor chip
India has been working on creating a semiconductor manufacturing ecosystem.(Source: Andrew Berezovsky/Alamy Stock Photo)

In a significant move, the Indian government has approved a total investment of $15.2 billion to set up three semiconductor plants in the country. This includes its first fab unit, to be built by Tata Group in collaboration with Taiwan-based Powerchip Semiconductor Manufacturing Corp (PSMC).

Tata Electronics Pvt Ltd (TEPL) along with PSMC will invest 910 billion Indian rupees ($10.9 billion) to set up a manufacturing unit with a capacity of 50,000 wafers per month at Dholera in the state of Gujarat.

This plant will manufacture 28-nanometer chips which may be used for electric vehicles, telecom, defense, consumer electronics, power electronics and automotive sectors, among others. It is likely to start production in the next 100 days.

Tata Group's Tata Semiconductor Assembly and Test Pvt Ltd will also set up an assembly, testing, marking and packaging (ATMP) unit in Morigaon in the state of Assam with an investment of INR270 billion ($3.25 billion).

In addition, Murugappa Group's CG Power, together with Renesas Electronics Corporation and Stars Microelectronics, will set up a semiconductor unit in Sanand in Gujarat with an investment of INR76 billion ($910 million). It will manufacture 15 million chips every day for consumer, industrial, automotive and power applications.

These initiatives will generate direct employment of 20,000 advanced technology jobs and about 60,000 indirect jobs, says the press release. 

Building a chip ecosystem

"Within a very short time, India Semiconductor Mission has achieved four big successes. With these units, the semiconductor ecosystem will get established in India. India already has deep capabilities in chip design. With these units, our country will develop capabilities in chip fabrication," says the press release. The "four big successes" refer to the three approved initiatives and last year's investment of $2.7 billion by US-based Micron Technology to set up chip assembly, testing and packaging units in Gujarat. 

"The Union Cabinet's approval on the establishment of three semiconductor units under the India Semiconductor Mission is a positive and commendable development. This is a progressive step for India and the strongly emerging manufacturing ecosystem in the country … it is expected to provide a fillip to the 'Digital India' mission through increased technological prowess and advancement of the indigenous industrial ecosystem, besides generating employment and attracting more investments in the country," said Lt Gen Dr SP Kochhar, director general of the Cellular Operators Association of India (COAI).

The Indian government is also in the process of evaluating Tower Semiconductor's proposal to invest $11 billion to build a fab unit in the country.

Challenges ahead

With the $150 billion Tata Group at the helm in two of the four semiconductor units, it is going to play a crucial role in helping build the country's semiconductor capabilities. The group recently purchased a plant in South India from Apple supplier Wistron and will be the first Indian company to manufacture iPhones. 

The government's announcement is likely to play a crucial role in advancing India's chipmaking ambitions. The country hopes the new units will help it boost its chipmaking capabilities to both supply the domestic market and export. These initiatives are also in line with India's ambition to emerge as a manufacturing hub.  

A key challenge that India might face is the lack of the required talent. Significantly, three of the four units are going to be based in the state of Gujarat, which is not particularly known to have a tech ecosystem. In addition, since India does not have any chipmaking capability it will be tough to attract the required skills. 

Secondly, chip manufacturing now involves navigating complex geopolitical equations, which might add to the challenge.

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About the Author(s)

Gagandeep Kaur

Contributing Editor

With more than a decade of experience, Gagandeep Kaur Sodhi has worked for the most prominent Indian communications industry publications including Dataquest, Business Standard, The Times of India, and Voice&Data, as well as for Light Reading. Delhi-based Kaur, who has knowledge of and covers a broad range of telecom industry developments, regularly interacts with the senior management of companies in India's telecom sector and has been directly responsible for delegate and speaker acquisition for prominent events such as Mobile Broadband Summit, 4G World India, and Next Generation Packet Transport Network.

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