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Race to build India’s first chip plant may be won in 2023

The US chip war on China could give India’s chip-making dreams a boost

India's first chip manufacturing plant should start construction in February of next year as part of the country's drive to become a bigger semiconductor hub.

That's according to Indian business publication Mint, which recently reported that work on ISMC Digital's $3 billion fab in the southwestern state of Karnataka could begin in a matter of months, if India's central government approves the project in time.

The timeline was provided by Ashwath Narayan, Karnataka's Minister for Information Technology, Electronics, and Skills Development. This means Karnataka could become the first Indian state to stand up a fab, according to the government official.

That would put ISMC's Karnataka fab ahead of a planned facility by Taiwan's Foxconn and Indian firm Vendanta in the western state of Gujarat as well as a $3.2 billion semiconductor park in the southern state of Tamil Nadu that has been proposed by Singapore's IGSS Ventures.

However, as we've noted elsewhere, chip-making plants require a massive effort to get going, so it will take around four to five years for ISMC's fab to become operational, according to the Business Standard.

ISMC, short for International Semiconductor Consortium, is a joint venture between United Arab Emirates-based investment firm Next Orbit Ventures and Israel-based Tower Semiconductor. With Intel planning to acquire Tower for $5.4 billion early next year, Intel could end up owning a piece of the ISMC fab in Karnataka.

The ISMC plant in Karnataka will focus on manufacturing 45nm to 65nm analog chips for the defense and automotive sectors, among others. As we've previously reported, the ISMC fab is expected to create about 1,500 jobs, plus 10,000 indirect jobs because of the plant's expected economic impact.

ISMC and other companies planning fabs in India are hoping to get a slice of the $10 billion in chip subsidies the federal government has carved out to build the domestic semiconductor industry.

While India doesn't have any chip manufacturing plants right now, the country has been a hub for chip design and other activities. Intel, for instance, has a sizable design and engineering presence, with 13,500 employees in the country as of last year. Other chip companies in India include MediaTek, TSMC, and NXP Semiconductors.

India's drive to become a chip-making hub is apparently benefiting from the United States' growing efforts to hamper China's semiconductor industry. According to the Business Standard, the US' restrictions on sales of semiconductor manufacturing equipment to China has prompted at least some companies to consider shifting production to India in the future. ®

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