Science & Technology

India Chip Manufacturing Strategy Makes Progress

India has been an observer of the process that can be called the chip race for several years, but gradually this country changed its status, becoming an active participant in the large-scale development of the microcircuits production system.

India Chip Manufacturing Strategy Makes Progress

New Delhi has received chip-making offers totaling $21 billion. Now the Government of India will have to consider the potential of the projects and share support for relevant initiatives between local companies and foreign brands or form something like a combination of the first and the second.

Israeli Tower Semiconductor Ltd. proposes to build a chip manufacturing plant. The cost of this project is $9 billion. The local Tata Group has proposed the creation of a chip manufacturing unit. In this case, the amount of financing is $8 billion. Both projects, if approved, will be implemented in the state of Gujarat, which is the homeland of the current Indian Prime Minister Narendra Modi. Information about the proposals of an Israeli company and an industrial giant from a South Asian country was published by the media with reference to insiders.

The semiconductor industry has ceased to be what can be described as a kind of specialized environment, becoming an area of geopolitical rivalry. This is a natural transformation, since chips are necessary for the full functioning of advanced technologies, access to which already determines and in the foreseeable future will determine the country’s potential to an even greater extent, including in the sphere of the economy and terms of military capabilities.

The United States, China, and Japan have already begun to actively finance the development of domestic microcircuits production. India has also joined these aspirations. Narendra Modi wants to turn the South Asian country into a global manufacturing hub. As part of the relevant efforts, New Delhi considers cooperation with foreign companies as one of the most important factors of activity. This concept is largely because India is currently inferior to some countries in terms of technological potential, which is why interaction with firms from other states is a reasonable solution that can accelerate the reduction of the backlog.

New Delhi is also trying to save money on expensive imports by developing domestic production. Moreover, India has plans to strengthen the smartphone assembly area, which is currently showing strong growth.

The South Asian country’s plan to boost chip production calls for the local government to shoulder half of the costs of any approved projects with an initial budget of $10 billion. India has yet to implement these intentions. New Delhi’s lavishly announced partnership with UK Vedanta Resources Ltd. and Taiwan’s Foxconn Technology Group is currently showing a kind of withering that began even before the start of the project.

Small batches of chips are now being produced in the northern part of India. This project is controlled by the government of the South Asian country.

Financial incentives from the government of Narendra Modi allow Apple to manufacture iPhones in India and export these products. This activity brings the tech giant revenues worth several billion dollars. Google also plans to start assembling its smartphones in India this year.

The Semiconductor Foundation has helped American memory chip manufacturer Micron Technology set up a $2.75 billion assembly and testing facility in Gujarat. The town of Dholera in this region is currently developing as a promising center for the production of microcircuits.

Tower will be able to gain a foothold in the rapidly developing Indian market if the company’s proposed chip-making plant construction project is implemented. Also, success in India would help the firm to move out of the shadows, which became a determinative factor for the atmosphere around the brand after the unsuccessful bid to acquire Intel Corp. The sales volumes of Tower are only a fraction of those of Intel and Taiwan Semiconductor Manufacturing Co. The company manufactures components for large customers, including, for example, Broadcom Inc. The firm also serves fast-growing sectors such as electric vehicles.

The media, citing insiders, report that Tower has a plan that provides for a gradual expansion of production in India over ten years. The company’s ultimate goal is to make 80,000 silicon wafers per month. If New Delhi approves this project, the South Asian country will create the first production unit operated by a large semiconductor firm.

Tata intends to establish a partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp. The company also held talks with United Microelectronics Corp., as reported by the media with reference to insiders. Tata also had plans to build a chip manufacturing plant in Dholera this year, but there is no information about its implementation.

Tower and Tata factories will produce so-called mature microcircuits. In this case, a 40-nanometer or older technology will be used. Similar chips are used in consumer electronics, automobiles, defense systems, and aircraft.

Tata also plans to build a microcircuits packaging plant in the eastern part of India. The cost of this project is $3 billion. Chips for car manufacturers will be assembled at this plant. The company intends to export products from the factory, which is still a project awaiting implementation. The construction of the plant will begin after receiving approval from the Government of India.

Tata is committed to investing billions of dollars in high-tech businesses. The company currently operates India’s largest smartphone component manufacturing plant. The construction of this factory cost more than $700 million. The plant is located in the southern part of India. In 2023, the company acquired factory of the Apple’s supplier in the South Asian country which is Wistron Corp. Moreover, Tata plans to build its own iPhone manufacturing plant.

Japanese Renesas Electronics Corp. intends to establish a joint venture with unit Murugappa Group CG Power and Industrial Solutions Ltd. for making packaging for microcircuits in India.

The media reports that in the next few weeks, the government of Narendra Modi may approve the implementation of projects for the production of chips. To receive a government subsidy, any project must provide detailed information, including mandatory agreements with a manufacturing technology partner. Also, in this case, it is necessary to inform the financing plans, the type of semiconductors, the making of which will be launched, and tell about the target customers.

Narendra Modi is currently striving for India to become a partner for American technological ambitions. It is worth noting that the current historical moment is favorable for achieving the corresponding goal, since against the background of growing tensions between Washington and Beijing, many companies are seeking to diversify production outside China while planning to maintain a manufacturing presence in Asia. In the context of the actual political reality and the global economic situation, India strives to position itself as a stable democracy and a reliable technology center for international partners who are interested in investing.

As we have reported earlier, India Cuts Tariffs to Entice iPhone Manufacturing.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.