According to the Indian Express on Sunday, Tower Semiconductor, a prominent chipmaker based in Israel, has presented a proposal to the Indian government for the establishment of an $8 billion semiconductor manufacturing facility in the country. In pursuit of government incentives, Tower intends to produce 65-nanometer and 40-nanometer chips in India, with a focus on serving industries like automotive and wearable electronics. The report said that India’s Minister of State for Electronics and Information Technology Rajeev Chandrasekhar had discussed the matter with Tower CEO Russel C Ellwanger in October last year.
The government’s $10 billion chip manufacturing scheme offers a 50 percent capital expenditure subsidy to companies that invest in fabs in the country. However, this is the only chipmaker that has offered to set up a plant in the country under the scheme.
India has been wooing chipmakers to boost its semiconductor industry. The government is also trying to upgrade its Semiconductor Laboratory in Mohali, the only existing chip factory in the country, which has been producing chips for strategic and defense purposes like the Chandrayaan mission. The factory is presently making substrates that are used for assembling chips. The government has received nine bids from Simmtech, the leading supplier of substrates, to Micron Technology Inc MU.O>, the world’s largest maker of memory chips, and US-based Micron’s largest supplier of silicon wafers.
However, a proposed $19.5 billion project by Taiwan-based Foxconn to produce advanced iPhones in India abruptly stopped last year after the company pulled out of a joint venture with controversial Indian businessman Vedanta Ltd VED.TO citing financial reasons.
Despite the challenges, the Indian government remains confident that it will be able to attract chipmakers and turn the country into a global hub for the sector. The government’s approach is to encourage investors and offer the necessary incentives, including tax breaks and infrastructure support. It is also open to tweaking the incentive package to suit each firm’s investment plans, a senior official told India Briefing.
If the Indian government clears the Tower Semiconductor proposal, it would be the first significant chipmaker with a fabrication pedigree to join the country’s $10 billion chip manufacturing scheme and boost New Delhi’s ambitions to become a global player in the sector. The Ministry of Electronics and IT assesses the proposal before the model code of conduct kicks in before this year’s general elections. Sources close to the matter said it is expected to take a decision soon.