Context
Coimbatore Emerges As Candidate For A Semiconductor Plant: Tata Group And Tamil Nadu Government In Talks Over Potential Investment
Representative image (Pixabay)
The TATA group and government of Tamil Nadu are in talks about the former setting up a semiconductor chip plant in the Coimbatore region.
The context: The Government of India is running a Rs 75,000 crore scheme to promote semiconductor design and manufacturing capacity in India.
-The government's move comes amid the ongoing acute shortage of semiconductor chips, which has caused production processes worldwide to go haywire and prices to jump.
-Demand for chips is likely to be worth around $100 billion in 2025 as against just $25 billion in 2020/21.
-Given India’s reliance on imports, this is seen as a strategic area for local capacity building.
The scheme: Unlike production-linked incentives in other areas, the government intends to support capital expenditure for semiconductor and display fabrication units.
-Semiconductor fab units will get 30-50 per cent of project cost support, display units will get upto 50 per cent of project costs.
-For other products such as sensors, compound semiconductor units and silicon photonics, the government will offer 30 per cent support towards capital expenditure.
-Chip design companies will get 50 per cent of eligible expenditure support from the government. They will also get a product deployment-linked incentive of 4-5 per cent of their net sales for 5 years.
TATA’s take: N Chandrasekaran, TATA group chairman, has said that the group has already gotten into precision manufacturing and related areas in the semiconductor supply chain.
-In addition to Tamil Nadu, the group is also speaking to governments of Karnataka and Telangana regarding setting up semiconductor fab units.
-The group will reportedly invest $300 million to set up an outsourced semiconductor assembly and test (OSAT) plant.
-An OSAT plant packages, assembles and tests foundry-made silicon wafers, turning them into finished semiconductor chips.
-The unit is likely to employ 4,000 highly skilled workers.
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