Semiconductor Value Chain

India Green Lights Two 300-mm Chip Fabs

17 September 2013

India's government recently approved plans to build two 300-mm wafer fabs, a milestone of sorts in India's long-running endeavor to establish a domestic semiconductor industry and lessen its dependence on chip imports.

Two consortia—one led by Jaiprakash Associates in association with IBM Corp. and the other led Hindustan Semiconductor Corp.—have proposed setting up these plants with a combined investment of approximately $8 billion, or Rs 51,550 crore, according to the Indian government's press information bureau. The semiconductor fabs would potentially start operating in the next two years and receive government subsidies.

Jaiprakash Associates—a multinational conglomerate based in India—will team with IBM as well as Israel's Tower Jazz Semiconductor to establish a 300-mm wafer fab in Greater Noida, about 12 miles from New Dehli. Plans call for the fab to be capable of 40,000 wafer starts per month using advanced CMOS technology. Initially, the fab will be capable of 90-, 65- and 45-nm process technology, with plans to expand to 28-nm production in the second phase of construction and 22-nm in the third phase.

The second group—which includes Hindustan Semiconductor., STMicroelectronics and Malaysian foundry Silterra—plans to build a 300-mm fab capable of 40,000 wafer starts per month in Prantij, near Gandhinagar, Gujarat. Plans call for this fab to be initially capable of 90-, 65- and 45-nm production in the first phase and 45-, 28- and 22-nm nodes in the second phase.

The technology providers would be required to have at least a 10 percent equity stake in the proposed projects, while the government would hold an 11 percent stake in each, according to press information bureau.

India's government also approved incentive packages for the two consortia, which include incentives already available under a special incentive package and a deduction available for R&D expenditures under India's Income Tax Act. The fabs would also be eligible for investment linked deductions. The government said it would also provide viability gap funding in the form of an interest free loan for a period of 10 years.

India, however, is also accepting proposals over the next four weeks from other leading companies interested in establishing semiconductor wafer fabs in the country. The government said it would extend the special package of incentives to the qualified proposals.

The India Electronics and Semiconductor Association (IESA) lauded the approval of the silicon wafer fabrication units in India, calling the approval of the fabs a "highly strategic game changer for India."

India consumes close to $7 billion worth of semiconductors every year. By 2020, consumption is expected to rise to $55 billion, according to the IESA. "With the location of a fab in India, the country could achieve a degree of self-sufficiency in electronics and partially reduce the very high supply chain risk that India is exposed to, without an alternate source for procurement," the IESA said through a statement.

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