The latest rumor indicated that Tower Semiconductor and Tata Group proposed to invest in setting up chip fabs in India's western state of Gujarat, and the state may become India's first chip ecosystem following a series of investments.
Bloomberg quoted sources saying that Tower Semiconductor and Tata Group proposed to invest US$9 billion and US$8 billion in setting up their separate chip fabs in Gujarat. Sources said India has received proposals worth US$21 billion and is now evaluating them.
The rumor came after Micron announced its US$2.75 billion ATMP facility in Gujarat in 2023, which is eligible for US$19.25 billion in government subsidy and expected to be operational by early 2025.
Besides Micron's project and the potential investments from Tower Semiconductor and Tata, South Korea-based equipment maker Simmtech plans to build a manufacturing facility in Sanand, Gujarat, and India-based Suchi Semicon is considering setting up manufacturing facilities in Gujarat. Japan-based semiconductor equipment supplier Disco also mulls to set up an R&D center in the state.
In Jul 2022, Gujarat became the first state in India to introduce a specialized semiconductor policy aimed at positioning the state as a leader in fostering the electronics system design & manufacturing (ESDM) ecosystem over five years. Besides a dedicated semiconductor policy, Gujarat has invested in building the Semicon city over 5,000-10,000 acres at the Dholera Special Investment Region as a dedicated manufacturing base for chip and display fabs. At the latest budget for the next fiscal year, the state government of Gujarat plans to set up a semiconductor school at Sanand with a budget outlay of INR330 million to create the required skilled labor force in the industry.
On the other hand, if the proposal comes through, Tower Semiconductor's Gujarat fab may be the company's first major investment in India. The analog chip maker has been expressing enthusiasm for entering India. In 2007, the company tried to make inroads in India by collaborating with SEMI India for a US$3 billion fab, which did not bear fruit. In 2010, Tower Semiconductor helped India's SCL to make 80nm chips. In 2013 and 2014, Tower Semiconductor joined an Indian-led consortium to set up a fab, which again failed to materialize.
Besides, Tower Semiconductor is likely to expand its outreach to Indian customers. Customers of Tower Semiconductor, which makes chips for Nuvoton Technology, Infineon, Broadcom, and Panasonic, are primarily based in the US, followed by China and South Korea.
Gujarat incentives for semiconductor investments | |
Expenditure | description |
Capex | Providing additional capital assistance at 40% of the subsidies extended by India's central government |
Land | A 75% subsidy is offered for the purchase of the initial 200 acres of land within the SIR, with subsequent land acquisitions for upstream or downstream projects eligible for a 50% subsidy on land expenses. |
Tax | One-time reimbursement of 100% stamp duty and registration fees paid to the government |
Water and Electricity | Water tariff at IN12 per cubic meter for 5 years, alongside a 50% capital subsidy for desalination plants. Additionally, there is an electricity subsidy of INR2 per unit. |
Source: Gujarat government, compiled by DIGITIMES Asia, February 2024
