With a budget of $3 billion investment in semiconductor assembly, and test units, the US-based company MICRON is all set to get approval from the Indian Government. The unit is being set up to outsource the semiconductor assembly and test (OSAT) unit with at least four assembly lines. The Idaho-headquartered company will initially invest about $2.5 billion with more investments likely to be made over a five-year period, sources said.
“There have been several rounds of discussions between the board of directors of Micron and government officials. The Micron board has been asked for details of its planned investment, the capacity it wants to create, and the government help it wants so that the process can be expedited,” according to an official aware of the details. It has been reported that Micron could be allocated a 300,000 square metre parcel of land between Ahmedabad and Sanand, in the Indian state of Gujurat.
Boost For India
The Indian government has introduced a $10 billion incentives program early in 2022 to try and encourage the creation of semiconductor manufacturing in the country. This will mark the first such approval of an OSAT unit — also referred to as Assembly Testing Marking and Packaging (ATMP) unit — by the central government which has unveiled a Rs 76,000 crore package to kickstart semiconductor manufacturing in the country.
The agreement would be a victory for Modi’s ambitious “Make in India” goals while providing Washington with a chance to fortify important supply chains outside of China. “The committee has really liked the proposal submitted by them (Micron).
There are some additional last-minute due diligence being done right now. It is a rigorous process as a lot of public money is involved. The proposal is under consideration and may be approved soon,” a senior government official told ET on Friday.
Micron expansion amid US and China tensions
In response to escalating Chinese tensions that are raising questions about the global reliance on Asian manufacturing hubs like Taiwan, the US is attempting to diversify the advanced chipmaking industry.
The Indian investment would come after China forbade the use of Micron chips in what Beijing deemed key infrastructure, a decision that raised questions about the position of US chipmakers in the largest semiconductor market in the world. On his US tour PM Modi will address the US Congress with the promise that his administration will cover half the cost of establishing all semiconductor sites, Modi has committed $10 billion to entice chipmakers to India.
Into the Bargain
Micron, which was established in Idaho in the US in 1978, has three offices in India — one in Bengaluru and two in Hyderabad. The company’s decision to diversify its supply chain into the country could also likely be a result of the partial ban imposed on it by China, sources said. Typically, these units require up to $5 billion investment compared to semiconductor fab units that involve investments in the range of $10 billion to $15 billion.
People aware of Micron’s proposal said that it was first submitted to the expert committee tasked with reviewing projects under India Semiconductor Mission (ISM) in March this year. The deadline to accept proposals in the ATMP/ OSAT category ends in December 2024.
