India scores its first fab, and it looks like it was at Japan's expense

PSMC does a deal with Tata in what really might be – all hype aside – an actual 'key milestone'

It looks like India has scored a deal to host its first semiconductor fab, possibly at the expense of a project in Japan.

This story starts last March when Taiwan's foundry-as-a-service outfit Powerchip (PSMC) announced plans to help giant Indian industrial conglomerate Tata build a fab capable of producing 50,000 12-inch wafers per month. At the time Tata told the world it would gain access to "leading edge and mature nodes including 28nm, 40nm, 55nm, 90nm & 110nm and also collaboration for high volume manufacturing." There was even talk that work on the fab might start this year, and that the announcement represented a "key milestone" in India's march towards becoming a significant semiconductor source.

Six months later, it turns out the deal was not final. Indeed, it was only last Friday that Tata and PSMC issued a statement announcing the completion of the definitive agreement to build the facility.

The deal is still all about design and construction assistance, rather than PSMC having an ongoing role, and mentions of construction starting this year have dropped off.

We're now told the fab will work on silicon for power management, display drivers, microcontrollers, and "high performance computing logic."

Tata has again described the definitive agreement as a "key milestone." It's also "a seminal moment in positioning India as a trusted partner in the global semiconductor supply chain."

And maybe it is. On the same day as Tata's announcement, Japanese financial services outfit SBI Group announced it had dissolved a joint venture with PSMC that explored creation of a semiconductor fab.

The Japanese deal looked a lot like the Indian venture: PSMC would provide know-how and SBI would put up all the cash, before formation of a joint venture.

PSMC last week pulled out.

"We have now received a notice from PSMC that it wishes to postpone the semiconductor manufacturing business in Japan as it has become difficult for PSMC to continue doing so," reads SBI's statement on the matter, which adds "we have made the difficult decision to conclude that it is difficult to continue considering operating a semiconductor foundry business in Japan with PSMC as a partner."

India's government has created multi-billion dollar funds to lure semiconductor manufacturers, but hasn't revealed whether the Tata/PSMC tie-up has scored any of that cash.

SBI's announcement mentions ongoing efforts to secure subsidies – suggesting Tokyo wasn't keen.

Whatever went down behind the scenes, PSMC has a new collaborator, Japan isn't getting a fab, and India will – albeit a pretty boring one that won't make high margin or leading edge products. India's government will ignore that and trumpet this as a triumph for its manufacturing and export ambitions. ®