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PLI Success: Three New Semiconductor Plants among Four in Total worth 1.48 Lakh Cr.

Indian Prime Minister laid the foundation of three semiconductor plants, which in total entail an estimated investment of Rs. 1.26 lakh crore. This information was shared via a PIB release from the Ministry of Electronics & IT on 13th March 2024. These plants had been accorded Union Cabinet’s approval on 29th February 2024.

TATA Group, CG Power to Set Up Semiconductor Plants

Two of these plants will be developed by the TATA Group, which include a semiconductor fabrication plant in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) in Gujarat, and a Semiconductor Assembly, Testing, Marking and Packaging (ATMP) plant in Assam. The third plant, a Semiconductor Assembly unit will be developed by CG Power and Industrial Solutions Ltd. (CG Power), part of the Chennai-headquartered Murugappa Group, in partnership with Japan’s Renesas Electronics Corporation and Thailand’s Stars Microelectronics.

Four Semiconductor Projects Coming up in India Parallelly

Groundbreaking of the aforementioned plants mark the first significant development in the Indian semiconductor fabrication space since the partnership between Indian metals giant Vedanta and Taiwan’s Foxconn for semiconductor fab came apart in July 2023.

Apart from these plants, USA’s Micron Technology is already in the process of setting up a USD 2.75 billion (about Rs. 22,744 crore) Semiconductor Assembly / ATMP Plant in Sanand, Gujarat. Interestingly, the EPC contract for Micron Tech’s facility was secured by another TATA subsidiary, TATA Projects, in September 2023.

Details of TATA Group’s Upcoming Semiconductor Plants

Semiconductor Fab Plant at Dholera to be Set Up with Rs. 91,000 Cr. Investment

TATA Electronics, in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC), will be setting up a semiconductor fabrication unit in Dholera, Gujarat. The estimated cost of development of this project has been reported as Rs. 91,000 crore (about USD 11 billion). PSMC will provide technology and execution support to TATA Electronics for the Dholera semiconductor fabrication plant.

Commenting on this partnership, Dr Randhir Thakur, CEO & MD, Tata Electronics, said, “Our partnership with PSMC provides access to a broad technology portfolio in leading edge and mature nodes including 28nm, 40nm, 55nm, 90nm & 110nm and also collaboration for high volume manufacturing”.

Semiconductor chipset

The Dholera unit will be equipped with data analytics and machine learning-enabled factory automation solutions, and will be capable of churning out 50,000 wafers per month. TATA Electronics’ release pertaining to this project further elaborated that the Dholera fabrication unit will produce semiconductor chips which will find applications in fields “…such as power management IC [Integrated Circuits], display drivers, microcontrollers (MCU) and high-performance computing logic”.

Further, TATA Electronics’ Dholera semiconductor fabrication facility is expected to create about 1,00,000 skilled jobs.

TATA Group’s Rs. 27,000 Cr. Assembly and Testing Facility in Assam

Apart from the Dholera fab unit, the Union Cabinet also accorded its approval to TATA Group’s proposed semiconductor Assembly and Testing Facility in Jagiroad, Assam. This facility will come up with an estimated investment of Rs. 27,000 crore.

TATA Electronics mentioned in its release that the focus of this facility would be on three technologies, namely Wire Bond, Flip Chip, and Integrated Systems Packaging (ISP).

Work on the Assam facility will begin in 2024, and it shall begin operations by mid-2025.

CG Power-Renesas Electronics-Stars Microelectronics JV to Develop 7,600 Cr. OSAT Plant in Sanand

CG Power

Apart from TATA Group’s semiconductor plants, the PM also laid the foundation stone for a Rs. 7,600 crore Outsourced Semiconductor Assembly and Test (OSAT)* facility which will be developed by CG Power‘s Joint Venture (JV) with Renesas Electronics and Stars Microelectronics. This 28-acre facility will be developed in a period of 5 years in Sanand, Gujarat, and is expected to begin production in the next 2.5 to 3 years.

*OSAT facilities provide third-party facility for Integrated Circuit (IC) packaging and testing.

As per CG Power’s stock filing dated 13th March 2024, this facility will indulge in the manufacturing of a comprehensive range of products including legacy packages such as Quad Flat No-lead (QFN) package and Quad Flat Package (QFP) and even more advanced semiconductor packages such as Flip Chip Ball Grid Array (FC BGA) and Flip Chip Chip-Scale Package (FC CSP). These products will find use in industries such as “Automotive, Consumer, Industrial, 5G, to name a few”. As per CG power, the Sanand’s plant’s production capacity of can be scaled up to 1.5 crore semiconductor packages per day.

This facility is expected to generate employment opportunities for about 5,000 people, which would be instrumental in “providing opportunities to the local communities” as per CG Power.

Commenting on this development, Mr. S. Vellayan, Chairman, CG Power and Industrial Solutions, said, “For India to become a truly global player in the semiconductor space, it is critical that we build a semiconductor cluster in a concentrated location similar to global leaders such as Taiwan. With a few facilities already announced in Gujarat, there are early signs of the state emerging as this cluster“.

Semiconductor Projects to get Government Incentive under PLI Scheme

In December 2021, the Government had notified a Rs. 76,000 crore outlay for semiconductors and display manufacturing in India. The aforementioned facilities are eligible for subsidies and benefits under this outlay, which offers government funding of 50% of the project cost for semiconductor fabrication plants as well as for semiconductor ATMP/OSAT facilities. Therefore, the government funding for TATA’s plants is speculated to be about Rs. 45,500 crore for the Dholera plant and Rs. 13,500 crore for the Assam plant, whereas CG Power’s plant in Sanand is eligible for Rs. 3,800 crore government funding.

Importance of Establishing Semiconductor Fabrication Units in India

It is common knowledge that semiconductors have diverse applications, with Integrated Circuits and Microcontrollers being used in a wide range of industries.

TATA Electronics expects the global semiconductor industry to grow to USD 1 trillion by 2030, with Indian semiconductor demand to surpass USD 110 billion. However, as of now, no significant semiconductor fabrication is being carried out in India, except that by Semi-Conductor Laboratory (SCL), Chandigarh. TATA Electronics would be among the first significant player to enter this field.

As per an article published by the Indian Express on 1st March 2024, the semiconductor fabrication industry is a “closed ecosystem” with Taiwan and South Korea making up “about 80% of the global foundry base for chips”, and the Netherlands’ ASML (Advanced Semiconductor Materials Lithography) Holding N.V. being the lone company to produce “EUV (extreme ultraviolet lithography) devices, without which it is not possible to make an advanced chip”.

Therefore, the importance of establishing semiconductor fabrication units assumes not only a national importance but also international significance in terms of liberalising the semiconductor industry.