CG Power-led venture to set up semiconductor facility in India

The venture would have to apply for the central government’s $10-billion chip manufacturing scheme to set up an Outsourced Semiconductor Assembly and Test (OSAT) plant. The scheme promises a 50 per cent capital expenditure subsidy to successful applicants.  OSAT facilities offer third-party packaging and test services, along with packaging silicon devices that are manufactured by foundries and provide testing devices before shipping to the market.

The establishment of the JV, investment and establishment of the chip testing facility are subject to necessary regulatory and statutory approvals and satisfactory completion of conditions precedents agreed between the parties, CG said.

US firm Micron Technology was the first company to receive the Centre’s approval to set up a chip packaging plant in Gujarat. Micron has said it will invest up to $825 million in the facility, with the facility costing a total of $2.75 billion.

While India is seeing traction in chip packaging and testing, it is yet to close in on a promising proposal to set up a foundry in the country — considered to be the holy grail of the chips ecosystem.

It had received three proposals to set up a foundry — from a Vedanta-Foxconn JV, international consortium ISMC, which included Israel-based Tower Semiconductor, and Singapore-based IGSS Ventures — however, none of them have worked out so far.

Vedanta-Foxconn had proposed to set up a $19.5-billion plant in Gujarat, however, the two split last July, dealing a blow to the proposed foundry. It is understood that the ability of Vedanta, which is reeling under a heavy debt load, to pay for acquiring the necessary technology for chipmaking played a key role.