On Wednesday, the Center announced a new incentive structure under its Rs 76,000 crore semiconductor manufacturing program offering to bear half of the cost of the project through semiconductor factory proposals, display panel factories, compound semiconductor proposals and even assembly and packaging units.
The firm’s decision came after a series of representations from candidates including ISMC Analog – a consortium comprising Israeli tech firm Tower Semiconductor and Mumbai-based Next Orbit Ventures, Innovative Global Solutions & Services (IGSS) Ventures. , based in Singapore, and Tata Electronics. – which aims for a state-of-the-art packaging facility.
“We had made a representation at our June meeting, both verbally and in writing, that the incentive should support all candidates equally,” an ISMC representative told ET. The consortium proposes to build a $3 billion fab that will manufacture 65 nanometer (nm) chips.
Letters sent to Tata Electronics and IGSS about the new incentive structure went unanswered.
Experts believe that with the revised incentive scheme, India can expect to show “quick wins” given the shorter lead times for older tech nodes as the construction of a semiconductor factory could take at least 18 months.
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In its announcement on Wednesday, the government said technology nodes larger than 45nm – used in automotive, electrical and telecommunications applications – make up around 50% of the semiconductor market.
K Krishna Moorthy, president and CEO of industry body IESA, said Western countries like the United States have focused on advanced nodes such as 5-7nm segments used in digital products like high-end servers, but cross-sections like the 40-65nm segment, dubbed analog and mixed-signal products, has “room for growth over the next 10-15 years,” adding that India has focused on the bulk of global semiconductor revenues, pegged at $600 billion by 2025.
In an earlier interview, electronics industry veteran and HCL co-founder Ajai Chowdhry told ET that there is a large market in India for applications using nodes larger than 28nm and for white goods. in the world, partly why investments in semiconductors committed elsewhere in countries will not. have a “chilling effect” on Indian investment.
Already, Vedanta-Foxconn, Singapore’s IGSS Ventures and ISMC Analog have committed over $26 billion in investments. The Vedanta-Foxconn joint venture in Gujarat is expected to take off in about two months with the groundbreaking ceremony at the chosen site in Gujarat, according to Vedanta chairman Anil Agarwal.
“Setup times for mature tech nodes and compound semiconductors can be much faster than fabs for advanced nodes, while investment is significantly lower. This should accelerate investments as ROI (ROI) is improving. Successful implementations will mark a much-needed quick win for India…” said Apurva Agarwal, principal analyst at market research firm MarketsandMarkets.
However, the government’s decision to change the incentive structure appeared “reactionary” to some industry experts who noted that “this is an area where nothing happens in a jiffy, where you invest and see the results in a year. It’s not like that.”
“This is an area that has a long gestation cycle. No one should expect any results from their investment in the next five to seven years or so,” said Ashish Lachhwani, founding director of Steradian Semiconductors.