Tamil Nadu: Singapore Company's Plans For A Semiconductor Chip Manufacturing Complex In The State

A Singapore-based company has announced plans to invest Rs 25,600 crore ($3.25 billion) in Tamil Nadu over the next five years to set up a semiconductor fab unit and a high-tech semiconductor park.

The agreement: An MoU was signed to this effect between IGSS Ventures (IGSSV) and the Tamil Nadu Guidance Bureau, the state government's nodal agency for investment promotion and single-window facilitation.

• The state's guidance department said it had allocated nine strategic sites, including two near Chennai, to house a semiconductor fab.

• Other media reports indicate that the ask is for a 300-acre land.

The proposal: IGSSV says that with the proposed Rs 25,600 crore investment, it will have a fab that runs 28 nm, 45 nm, and 65 nm technology.

• In a recent interview, IGSSV Singapore founder-CEO Raj Kumar said that the group has experience in providing fab transformation and management services to IDMs and foundry fabs in the US, Europe, UK, Taiwan, South Korea, Singapore, and Malaysia.

• The only technology provider IGSSV has mentioned so far is the Interuniversity Microelectronics Centre (IMEC).

• IMEC is what can be called an intermediate research organisation in the world of semiconductor fabs. It is predominantly an R&D institute, not a high-volume commercial fab. It lacks experience in high-volume manufacturing and tech-readiness.

Scepticism among experts: Some industry experts are sceptical about the claims made by IGSSV.

• According to estimates, at the level of investment proposed by IGSSV, it would be challenging to achieve the scale indicated by IGSSV's plan.

• A rough calculation based on the incentives offered by the Union government tells that the incentive sought by the IGSSV proposal is likely to be to the tune of close to $1 billion.

• This investment size means that IGSSV is likely to have proposed setting up a 65 nm (or close) fab.

• "IMEC model is very different compared to what they tout. They don't do complete technology development. They do process optimisation for established foundries and fabless companies. They have some IP libraries (highly reduced like Lite version), but that is not equivalent to what a typical foundry provides," one industry watcher said.

• Some experts have also raised questions about the ability of IGSSV to achieve funding closure even if they receive 50 per cent of the funding required for the fab from the central government (by proposing a 28 nm fab) and receive further incentives from the state government.

Not the only company: IGSS Ventures is among three entities that have submitted applications this year seeking incentives under PM Narendra Modi government's Rs 76,000 crore Semicon India Programme for setting up semiconductor fabs in India for manufacturing semiconductor chips.

• Vedanta Foxconn JV and ISMC are the other two applicants.

• Earlier in May, ISMC, representing a consortium of investors led by Abu Dhabi-based Next Orbit Ventures along with Israel's Tower Semiconductor as a technology partner, signed an MoU with the Karnataka government to set up a $3 billion 65 nm analog fab.

• The proposed fab is to be set up on 150 acres of land in Kochanahalli Industrial Area in Mysuru District. Intel is acquiring Tower Semiconductor for $5.4 billion.

• Vedanta-Foxconn, the third applicant, is reportedly looking for 1,000 acres to set up its proposed $7-8 billion 28 nm semiconductor fab and display fabs. The JV is said to be in discussions with states like Gujarat, Maharashtra, and Karnataka.

Bottom line: As the world moves towards resilient supply chains, India has taken timely action by attracting semiconductor chip manufacturing companies. The emergence of peripheral issues is not a very big concern considering India is becoming a hub for AI manufacturing.