On September 5, the Maharashtra government granted approval for a landmark semiconductor manufacturing project in Panvel, Raigad district. This initiative is a joint venture between Israel’s Tower Semiconductor and India’s Adani Group, marking a significant step forward in India’s drive to establish itself as a global player in the semiconductor industry.
Project details and investment
The project involves an ambitious investment of Rs 83,947 crore and is planned to roll out in two phases. The initial phase will commence with a production capacity of 40,000 wafers per month, which will be doubled to 80,000 wafers per month in the second phase. If realized, this will be India’s second chip manufacturing facility and the sixth plant involved in silicon chip production or testing across the country.
India’s expanding semiconductor landscape
The approval of this project comes amid New Delhi’s ongoing efforts to transform India into a global semiconductor hub. In 2024, three semiconductor units began construction, with a fourth recently approved under the India Semiconductor Mission (ISM). These facilities include:
1. A Chip Fabrication Unit in Dholera, Gujarat
2. Four Assembly and Testing Plants (ATMP and OSAT) in Sanand, Gujarat, and Morigaon, Assam
Collectively, these projects represent a total investment of Rs 1.5 lakh crore, with an impressive combined production capacity of approximately 7 crore chips per day. The ISM is rapidly reshaping India’s semiconductor landscape, positioning it as a formidable competitor in the global market.
Key semiconductor facilities emerging across India
Several critical semiconductor facilities are now under development, each contributing to India’s ambition of becoming a semiconductor powerhouse:
1. Micron’s OSAT Facility, Sanand
American chipmaker Micron Technology is constructing an Outsourced Semiconductor Assembly and Testing (OSAT) plant in Sanand, Gujarat, with a total investment of 2.75 billion dollars. The project is supported by the central and Gujarat governments, contributing 50 per cent and 20 per cent of the funding, respectively. Approved in June 2023 as the first ISM project, this facility will assemble and test DRAM and NAND products for domestic and international markets. The first made-in-India chip is expected to debut by mid-2025.
2. Dholera: India’s First Chip Fabrication Plant
Tata Electronics, in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC), is setting up a mega semiconductor fabrication plant in Dholera, Gujarat. Laid by Prime Minister Narendra Modi in March 2024, this plant will produce 50,000 wafers per month with a capital investment of Rs 91,000 crore. The Dholera fab aims to deliver its first batch of semiconductors by December 2026, focusing on sectors like automotive, computing, communications, and AI.
3. Morigaon: India’s First Indigenous Semiconductor Assembly and Testing Facility
In Morigaon, Assam, Tata Electronics is establishing the country’s first greenfield semiconductor assembly and testing facility in the North East. With an investment of Rs 27,000 crore, this unit is expected to create over 27,000 jobs and handle assembly, testing, and packaging of semiconductors. The facility will focus on three key technologies — wire bond, flip chip, and integrated systems packaging (ISP), with a capacity of 48 million chips per day. Operations are anticipated to begin by mid-2025.
4. C G Power’s OSAT Facility, Sanand
The Murugappa Group’s C G Power, in collaboration with Japan’s Renesas Electronics Corporation and Thailand’s Stars Microelectronics, is developing an advanced OSAT facility in Sanand, Gujarat. With an investment of Rs 7,600 crore over five years, this plant will produce a wide range of semiconductor products for industries including automotive, consumer electronics, and 5G technology. It is expected to create 5,000 jobs and scale up production to 1.5 crore units per day within the next three years.
5. Kaynes Semicon Plant, Gujarat
On September 2, the Union Cabinet approved Kaynes Semicon’s proposal to set up an OSAT unit in Sanand, Gujarat, with an investment of Rs 3,307 crore. The facility will have a production capacity of 6.3 million chips per day and receive 50 per cent capital investment support under the ISM’s modified scheme. This development aligns with India’s strategy to offer a viable alternative to China’s semiconductor industry amid ongoing geopolitical tensions.
Strengthening India’s position in global semiconductor market
These developments indicate that New Delhi’s semiconductor program is gaining momentum, following a slow start. The recent approvals and progress of new units underscore the government’s commitment to fostering a robust domestic semiconductor ecosystem.
In response to the growing demand and strategic importance of semiconductors, the Indian government has decided to enhance its chip manufacturing incentive policy, increasing the funding outlay for the second phase to 15 billion dollars, up from10 billion dollars in the first phase. This expanded financial support aims to ensure the successful establishment of these critical facilities and strengthen India’s position as a global semiconductor hub.
