India Embarks On Semiconductor Manufacturing With Three New Plants

India is on the verge of a significant leap in semiconductor manufacturing, with the Ministry of Electronics and Information Technology (MeitY) green-lighting the establishment of three semiconductor plants across the country. These plants, set to be located in Dholera and Sanand in Gujarat, and Morigaon in Assam, mark a pivotal shift in India's effort to strengthen its position in the global semiconductor industry.

Tata-PSMC Joint Venture in Gujarat

In a notable development, Tata Electronics has partnered with Taiwan's Powerchip Semiconductor Manufacturing Corp. (PSMC) to launch India's first semiconductor fabrication plant in Dholera, Gujarat. This ambitious project involves an investment of Rs 91,000 crore and is a part of the Semicon India Programme. Announced via a social media post by MeitY on February 29, 2024, this collaboration aims to catalyze India's participation in the semiconductor value chain.

MeitY's Ashwani Vaishnaw has highlighted the potential for reducing the typical 3-4 years production timeline for semiconductor fabs, thanks to advancements in assembly, testing, marking, and packaging (ATMP) technology.

Expanding India’s Semiconductor Manufacturing Capability

Beyond Dholera, the government has approved a chip assembly and testing unit by Tata Semiconductor Assembly and Test Pvt. Ltd in Assam, with investments reaching Rs 27,000 crore. Additionally, a collaboration between CG Power and Japan's Renesas will see the establishment of another semiconductor plant in Sanand, Gujarat, with a projected daily output of 15 million chips through an investment of Rs 7,600 crore. These moves complement the existing Rs 22,516-crore chip assembly plant by US-based Micron, further solidifying India's stance in the semiconductor manufacturing sector.

Towards a Truly 'Made in India’ Smartphone

While many smartphones in India currently bear the "Made in India" label, they are predominantly assembled rather than manufactured in the country. The absence of a local semiconductor fabrication facility has been a significant barrier to achieving a fully Made in India smartphone. However, the establishment of the new semiconductor fab is expected to change this narrative, bringing India closer to realizing the vision of truly home-grown electronic devices. Although complete localization may still be some time away due to various challenges, the government's initiative to enhance the assembly sector through new production-linked incentive (PLI) schemes aimed at attracting international component manufacturers bodes well for the future of India's electronics manufacturing ecosystem.

These developments represent a strategic move by India to not only become self-reliant in semiconductor production but also to carve a niche for itself in the global electronics manufacturing landscape.