Tata Sons to take India’s semiconductor mission forward, produce chips at home

India will soon be a key part of the global semiconductor supply chain, with the Tata Group announcing to produce semiconductors at home within a few years.

In a recent interview, Tata Sons chairperson Natarajan Chandrasekaran, said that the company plans to set up a chip assembly testing business as part of its newly-set up electric vehicles wing.

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“We have created Tata Electronics, under which we are going to set up semiconductor assembly testing business,” Chandrasekaran told Nikkei Asia.

He said that the company will have discussions with multiple players about the business, hinting that a tie-up with existing chip manufacturers maybe on the cards.

Stressing that Tata Sons wants to tap into the plump market of electronics manufacturing which is worth $1 trillion, Chandrasekaran said moving forward the company would mull the possibility to launch an upstream chip fabrication platform.

Chandrasekaran said the conglomerate has also set aside an investment of $90 billion for the next five years. It would include investing in a new business for the manufacture of EVs and EV batteries, production of renewable energy and development of “super apps” which would help people avail goods and services.

As part of its ambition to foray into chip production, the Indian government announced its semiconductor scheme called India Semiconductor Mission, worth ₹76,000 crore on December 15 last year.

While the government received proposals for three semiconductor fab and two display fab in the round closing in February 2022, the scheme was later modified in September where the approved fabs were given 50 per cent incentive. The state governments were supposed to sweeten the pot by providing another set of incentive.

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Fabs or water fabrication plants are upstream semiconductor manufacturing process plants, which are much more technologically challenging and costly to set up than the downstream process of assembly and testing.

The scheme, however, has been unable to make headway, drawing sharp criticism from the industry, as the government is yet to approve the applications it received earlier this year.