At global summit, Gujarat betting big on Make-in-India chips

On the second day of the 10th edition of the Vibrant Gujarat Global Summit in Gandhinagar, the semiconductor sector took centre stage as a slew of industry stalwarts declared their investment commitments.

N Chandrasekharan, Chairman of Tata Sons, announced a huge semiconductor fabrication plant in the Dholera Special Investment Region (SIR).

“We are about to conclude negotiations and start the set-up in 2024,” he announced on January 11.

Micron, Simmtech

Tata’s announcement came after US chipmaker Micron and South Korea’s Simmtech unveiled plans to boost the semiconductor industry in Gujarat. Simmtech has signed an MoU (memorandum of understanding) with the Gujarat government to set up a plant near the Micron plant in the Sanand industrial area near Ahmedabad.

Simmtech is the world’s largest manufacturer of semiconductor substrate, the supporting material upon which the elements of a semiconductor device are fabricated.

“Our previous co-location investments with Micron in China and Malaysia turned to be a success and we are looking forward to replicating the success in India as well,” said Jeffery Chun, Global CEO of Simmtech, in his address.

He added that the company will support Micron’s semiconductor plant in Gujarat. “This unit will be set up in Sanand near Ahmedabad at a cost of Rs 1,250 crore”, said Ashwini Vaishnav, Union Minister for Electronics and IT. He was addressing the semiconductor and electronics seminar.

Make-in-India

“Gujarat is set to manufacture the country’s first Make-in-India chip in 2024,” Vaishnav said while urging IIT-Gandhinagar to establish a centre of excellence for research and development for semiconductors.

Micron also signed an MoU with the New Age Makers Institute of Technology (NAMTECH), an India education initiative of the ArcelorMittal Nippon Steel group, to develop talent for its semiconductor operations in India.

The US-based firm has hired over 200 employees for its plant in India which shall begin its operations by the first half of 2025.

“As of the end of October 2023, the Indian government has received a total of 45 applications under its Rs 760 billion semiconductor and display manufacturing scheme. These applications cover five requests for the establishment of semiconductor fabs, two for display fabs, nine for the setup of compound and ATMP facilities and 29 for the design-linked incentive scheme,” said Vaishnav.

Industry setbacks

Semiconductor manufacturing has been one of the key business agendas of Prime Minister Narendra Modi. But India’s chipmaking ambitions that was first laid out in 2021 suffered setbacks with floundering of offers of Rs 10 billion as incentives to the semiconductor chipmaking industry in the country.

As a result, some proposals were stalled or cancelled including Taiwan’s leading company Foxconn which backed out of a Rs 19.5 billion chip joint venture with India’s Vedanta after it claimed that the project was not moving fast enough.

Despite the setback, Gujarat, Modi’s home state, has been pushing to bring the investment of the sector since the start of 2021.

Gujarat’s efforts

Recently, Gujarat Chief Minister Bhupendra Patel held investment talks with chipmaking leaders of the sector while state officials visited Japan to meet some executives from the chips industry.

“We continue to hold investment talks with semiconductor companies in Japan, South Korea and the US,” Patel said earlier. But he refused to disclose names of the companies the Gujarat government was in talks with.

“Recognising the extensive utilization of semiconductor chips in defence and telecommunications, the Gujarat semiconductor policy aims to generate over 20 lakh jobs in coming five years,” said Patel.

In July last year, Gujarat announced a dedicated policy to draw new investments in the semiconductor sector by offering incentives and subsidies to start operations in the state that will remain in force till 2027.

According to a state government release, the policy has been designed in line with the Centre’s India Semiconductor Mission to attract and facilitate new projects in the sector.

Dholera City

Under the policy, the state government will set up Dholera Semicon City near Ahmedabad where concerned projects will be given subsidies for setting up manufacturing units. Besides, to encourage investments, a 75 per cent subsidy is being offered on the purchase of first 200 acres land required for setting up manufacturing units, with additional land provided at 50 per cent subsidy.

The eligible projects under this policy enjoy a power tariff subsidy of Rs 2 per unit for a period of 10 years and water at a rate of Rs 12 per cubic metre for the first five years. There are additional incentives for projects with significant foreign direct investment or those relocating from overseas locations.