Think small, score big: India details subsidies for chipmakers

More advanced manufacturing processes will attract the big rupees, but scheme seems unlikely to make India a major player

India’s government has revealed more details about its plans to become a major chip manufacturing hub .

The nation yesterday published a document [PDF] that reveals its government will cover up to 50 to per cent of the set-up cost for manufacturers looking to establish 28-nm or more advanced nodes, up to 40 per cent for 28-nm to 45-nm nodes and up to 30 per cent for 45-nm to 65-nm nodes.

India’s plan requires companies to establish 300-mm wafer factories, and to start work on at least 40,000 wafers per month. Companies need to show at a minimum competency to produce on the 28-nm process. The government will support companies for up to six years.

In July 2021, semiconductor-centric analyst house IC Insights rated Taiwan as the world’s largest source of semiconductors, with capacity to produce 4.45 million 200mm equivalent wafers each month. India has aimed to secure at least four factories under its new scheme and if they all hit 40,000 wafers a month the total would add not quite one per cent to global semiconductor manufacturing capacity.

Needless to say, that will not make India a powerhouse, or scare China (which can build 3.2 million wafers a month).

Prime Minister Narendra Modi nonetheless said the plan will "position India as global hub for electronics manufacturing with semiconductors as the foundational building block".

India’s plan also calls for participants in the scheme to use 2.5 per cent of the funds received on " meeting the R&D, skill development and training requirements for the development of semiconductor ecosystem in India."

The government estimates the Indian semiconductor market was worth $15bn in 2020 and could reach $63bn by 2026, thanks to global demand for wireless infrastructure, connected cars, and yet more consumer electronics.

Indian media report that Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. are among the companies looking to strike a deal with the Indian government, Indian media has reported.

The semiconductor subsidies were offered in the context of India’s Narendra Modi said the new scheme furthers the nation's "AtmaNirbhar Bharat" self-sufficiency plan, an effort that includes attempts to cut India’s dependence on China amid border tensions. The world’s largest democracy has therefore taken steps such as banning numerous Chinese apps and trying to strongarm Apple into expanding its manufacturing presence. That effort saw workers who claimed they had not been paid by contract manufacturer Wistron riot near the city of Bengaluru. ®

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