While India is yet to approve a semiconductor fabrication or production plant — a key to the government’s ambitious plan of making the country a chips hub in the next five years — some other crucial parts of the chips ecosystem were finalised during PM Modi’s US visit.
US Chip maker Micron Technology, a leading manufacturer of memory chips — which was recently barred by the Chinese government from national projects over alleged national security risks — has become the most high profile name to commit investment in India to build a chip packaging plant.
Other leading names including Applied Materials and Lam Research have announced that they will support research and training programs in the country.
Here’s a look at the announcements and the problems that India has to address to realise its chip making ambitions, especially at a time when companies are looking to diversify their operations away from China:
Micron’s chip packaging plant
Micron Technology has said it will invest up to $825 million in its first semiconductor assembly and test facility in India, constructed under the Centre’s incentive scheme for the chips ecosystem in the country. The facility will be built in Gujarat.
The facility will cost a total of $2.75 billion – of which, Micron will invest $825 million, 50 per cent will come from the Central government and 20 per cent from the Gujarat government.
Micron Technologies is essentially a maker of memory and data storage modules, including dynamic random-access memory (DRAM), flash memory, and USB flash drives.
However, at its Gujarat plant, it will initially start with packaging semiconductor chips — a less complex process than manufacturing memory chips, albeit still an important part of the chips’ ecosystem.
To start off, Micron will start packaging DDR 4 modules at the Gujarat plant. Subsequently, it will start the process for DDR 5, DDR 6, NAND modules and solid state drives. DDR stands for ‘Double Data Rate’ and the numbers next to it represent the generation of the modules. DDR 5, which was launched in 2021 is currently the latest generation, with testing for DDR 6 expected to begin next year.
Rajeev Chandrasekhar, Minister of State for Electronics and IT, said that in the future, Micron might also start producing memory modules, rather than just its casing, in India. However, that could take several years.
Micron has said construction of the new facility in Gujarat is expected to begin in 2023 and the first phase of the project will be operational in late 2024. A second phase of the project is expected to start toward the second half of the decade, it said. The two phases together will create up to 5,000 new direct Micron jobs.
Applied Materials’ research centre
Applied Materials plans to build a collaborative engineering centre in Bengaluru and intends to make a gross incremental investment of $400 Million over four years to establish the new centre.
The new centre aims to bring together applied engineers, global and domestic suppliers of equipment subsystems and components, and major research and academic institutions like IIT Bombay and IISc Bangalore, to work together in one location to help in the innovation and commercialisation of technologies needed to produce next-generation subsystems and components in India which will be used for manufacturing of semiconductor equipment.
In its first five years of operation, the centre could support more than $2 billion of spending and is expected to create at least 500 new advanced engineering jobs.
While it has not yet made any commitment to manufacture in India, globally, Applied Materials is among the leading suppliers of equipment, services and software for the manufacture of semiconductor chips for electronics, flat panel displays for computers, smartphones, televisions, and solar products.
Applied Materials currently operates across six sites in India.
Lam Research
The company, which is a leading designer and manufacturer of products for semiconductor manufacturing, has proposed a partnership with India to educate and train semiconductor technologists through its ‘Semiverse’ solution.
Chandrasekhar said that under this solution, people can experience working in a chip lab through a virtual simulation.
Once this program is integrated with the revised curriculum launched recently by AICTE, it will educate 60,000 professionals over the next ten years. The first pilot for the project will start in August 2023.
Chinks in the armour
Even as India managed to secure a flurry of semiconductors related deals during Modi’s US visit, any concrete movement in building a semiconductor fab continues to be an elusive prospect.
India’s Rs 76,000 crore scheme to boost the chip ecosystem has to receive any marquee name to set up a fab in the country. To that end, it has received three proposals – from a Vedanta-Foxconn joint venture, international consortium ISMC which included Israel-based Tower Semiconductor, and Singapore-based IGSS Ventures.
However, The Indian Express earlier reported that all three proposals were facing roadblocks.
Vedanta-Foxconn, it is learnt, had initially applied for a 28-nanometre semiconductor manufacturing plant in January 2022, but it has yet to communicate to the government whether it has secured the technology. Neither Vedanta nor Foxconn have the technology to manufacture such chips and will need to licence it from another company. Vedanta, the metals and mining conglomerate, is struggling to reduce its debt.
ISMC, backed by Abu Dhabi-based Next Orbit and Tower Semiconductor, has asked the Centre not to consider its proposal owing to a pending merger between Intel and Tower Semiconductor. The merger continues to be delayed more than a year after its first announcement.
IGSS Venture’s proposal was not found to be up to the mark by the government’s advisory committee and, as a result, is on the backburner, it is learnt.
Why India needs to make chips
India has identified electronics manufacturing as a key sector to boost its growth in the coming years by producing goods not just for the domestic market, but also for exporting to the world. While some manufacturing schemes, such as that for smartphone manufacturing, have taken off in the country with Apple taking a lead, the entire process is largely centred around assembling various components that are imported from elsewhere.
Prime Minister Narendra Modi has made chip manufacturing a top priority for India’s economic strategy as he wants to “usher in a new era in electronics manufacturing” by luring global companies.
It is, therefore, clear that building semiconductors domestically is crucial for the government’s vision to develop a domestic electronics supply chain and eventually reduce its imports from foreign countries, especially China – which despite its own challenges remains to be the number one destination for such manufacturing.
It is a pressing time for India to venture into electronics manufacturing, with chips being an important part of the puzzle – all electronics items have semiconductor chips in them, and as more companies try to diversify their bases from China, India has an opportunity to emerge as a reliable destination.
The United States of America also passed the CHIPS Act last August, providing subsidies of around $280 billion for manufacturing chips in the country. It has also imposed additional restrictions and sanctions on the Chinese semiconductor industry.
Prime Minister Narendra Modi with Micron CEO Sanjay Mehrotra (second from left) and others during a meeting, in Washington, USA, Wednesday, June 21, 2023. (PTI Photo) 
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