Here's Why Intel Could Be On Its Way To Setting A Semiconductor Unit In India

The shortage of semiconductors, the most vital part for automobiles, computers, mobile phones, healthcare equipment and others, was felt across the world in recent months.

India has decided to become self-sufficient in chip making and to boost this initiative while Cabinet recently approved Rs 76,000 crore production-linked incentives (PLI), the American chipmaker Intel may have indicated additional good news.

People began to assume about Intel's semiconductor plant in India after Ashwini Vaishnaw, Union Minister for Electronics and Information Technology, said “Intel – Welcome to India” in a tweet after the Inter Foundry Services president Dr Randhir Thakur congratulated the Minister for the new initiative.

He said, “Congrats to @GoI_MeitY @AshwiniVaishnaw @Rajeev_GoI for Semiconductor design & manufacturing incentives for India as hub for electronics & semiconductors. Glad to see a plan laid out for all aspects of the supply chain: talent, design, manufacturing, test, packaging & logistics.”

While announcing the decision about the Rs 76,000-crore policy boost, the Minister noted that electronics play an essential role in everyday life and semiconductor chips are a critical component of electronics. By providing a globally competitive incentive package to enterprises in semiconductors and display manufacturing, as well as design, the scheme is projected to enter into a new in electronics manufacturing. It will boost India's technological capacity and economic self-sufficiency in these vital areas.

According to reports, by facilitating finance support and technological cooperation, the programme will boost semiconductor and display manufacturing. Additionally, companies involved in silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensors fabs, semiconductor packaging, and semiconductor design will benefit from the government's attractive incentive support.

To approve applications for at least two greenfield semiconductor fabs and two display fabs in the country, the centre will work closely with state governments on high-tech clusters with the necessary infrastructure in terms of land, semiconductor grade water, power, logistics, and research ecosystem. The IT Minister will take the necessary efforts to modernise and commercialise the semiconductor laboratory (SCL).

The IT Ministry will look at the potential of an SCL-commercial fab partner forming a joint venture to modernise the brownfield fab plant. Furthermore, it was reported that the scheme for setting up compound semiconductors/silicon photonics/sensors fabs and Semiconductor ATMP/OSAT facilities in India will provide approved units with the financial assistance of 30 per cent of capital expenditure.

However, under this newly approved scheme, at least 15 such compound semiconductor and semiconductor packaging units are expected to be created with government assistance. Additionally, support will be provided to 100 domestic semiconductor design companies working on Integrated Circuits (ICs), Chipsets, System on Chips (SoCs) and semiconductor linked to design, with a goal of facilitating the growth of at least 20 of these companies with a turnover of more than Rs 1,500 crore in the next five years.

Semiconductor Unit In India

Even though the company has not made any official announcement regarding its plan to establish a chip-making plant in India, the IT Minister’s recent tweet and the congratulation note from Thakur have indicated the possibility.

Earlier this year, according to a July report by The Economic Times, Prakash Mallya, vice president and MD of sales, marketing and communications group Intel stated that the business is "deeply" dedicated to the market, having invested over $7 billion in design and research and development (R&D) facilities in India.

“It is going to be a journey. Several components need to come together for the entire ecosystem, and semiconductor is just one part of it. And from an Intel point of view, I would say when you look at our design and R&D facility in the country, we are deeply committed to the market. We have over $7 billion invested and you look at that span of expertise is relevant to every segment,” he said.

As reported earlier, Intel has already announced in September 2021 that it will spend $20 billion to build two new chip factories in Chandler, a city in the American state of Arizona. Additionally, the company said this month that it would invest $7 billion in Penang, Malaysia, to develop its production capabilities in sophisticated semiconductor packaging technologies.

So it looks like, as of now Tata Group is the only company that has revealed its intention to join the semiconductor field. In late November, it was reported that the company was in talks with three states to invest up to $300 million in a semiconductor assembly and test unit—that include Telangana, Karnataka and Tamil Nadu, where the company is already constructing a high-tech electronics manufacturing facility.

Separately, according to reports India and Taiwan have begun negotiations for a free-trade agreement and setting up a semiconductor manufacturing hub in an Indian city. If the move to create the semiconductor manufacturing plant succeeds, it will be only the second such facility by Taiwan in a foreign country after its production hub in the United States, people familiar with the development said.