The Union Cabinet Monday cleared a semiconductor assembly and testing plant being set up by Kaynes Semicon at a cost of Rs 3,300 crore. This is the fifth semiconductor unit, and the fourth assembly unit, to receive Cabinet approval under India’s ambitious Rs 76,000 crore chip manufacturing incentive scheme. “The capacity of this unit will be 60 lakh chips per day… The chips produced in this unit will cater to a wide variety of applications which include segments such as industrial, automotive, electric vehicles, consumer electronics, telecom, mobile phones, etc.” the Ministry of Electronics and IT (MeitY) said in a statement. The plant will be constructed in Sanand, Gujarat. It is understood that the plant was initially to come up in Telangana, but was moved to Gujarat, after the government indicated that Sanand was coming up as a cluster for chip assembly plants. It is also learnt that the government’s subsidy towards the plant will be around Rs 1,300 crore. India has ambitions to become a major chip hub on the lines of the United States, Taiwan and South Korea, and has been courting foreign companies to set up operations in the country. Previously, the country has approved a fabrication plant worth $11 billion being set up by Tata Electronics in partnership with Taiwan’s Powerchip, and three different chip assembly plants being set up by the Tatas, US-based Micron Technology, and Murugappa Group’s CG Power in partnership with Japan’s Renesas. Currently, there are more proposals to set up semiconductor units with the government. This includes a Rs 78,000 crore fabrication plant proposed by Israel’s Tower Semiconductor, and a Rs 4,000 crore assembly plant by Zoho. After having committed nearly all of the $10 billion in subsidies under its ambitious semiconductor manufacturing incentive policy, the government has prepared a blueprint for the second phase of the scheme — it could increase the outlay of the programme to $15 billion, offer capital support for raw materials and gases used in chip manufacturing, and reduce subsidies for assembly and testing plants, The Indian Express had earlier reported. In an internal note prepared with the projections for the renewal of the scheme, the government has also decided to reduce the capex subsidy for assembly and testing plants (ATMP/OSAT) from the current 50 per cent to 30 per cent for conventional packaging technologies, and 40 per cent for advanced packaging technologies. The government also does not want to support technology transfer costs under the new incentive scheme, it is understood. This means that companies partnering with others for using their chip manufacturing technology may have to pay out of their own pocket. Under the new scheme, the government could also offer capital equipment and ecosystem support such as gases, chemicals, and raw materials needed at assembly and testing plants. It could also look at incentivising fabrication of micro-LED displays. It is also learnt that Micron Technology’s ATMP plant in Gujarat’s Sanand is running 133 days behind schedule, due to the company’s inability to hire sufficient construction headcount. The Tatas have sought that the requirement for PSMC to demonstrate capability to manufacture 28 nanometre chips should be exempted for extending fiscal support for the node. The government is considering the company’s request, but has not come to a conclusion yet.
