India gets a US$20b push to manufacture semiconductor, display fabs

• Five companies have shown interest to construct local semiconductor and display fabrication facilities in India–with proposals worth US$20.5 billion.
• The three companies that have sent in their proposals include Singapore’s IGSS ventures, ISMC, and Vedanta in a JV with Foxconn.
• The South Asian nation’s semiconductor market is estimated to reach US$63 billion by 2026 compared with US$15 billion in 2020.

In December last year, India announced a ‘Semicon India Program’ in an effort to compete with other bases in Asia to reduce its import dependencies. The program entailed plans of setting up of greenfield semiconductor fabs and display fabs in the country as well as developing of R&D and design capabilities.

To recall, the government, under the Semicon India Program, began receiving proposals from companies beginning this year. Under the program, the government is meant to offer incentives of Rs760 billion (US$10.2 billion) over six years for domestic production of semiconductor fabs, display fabs, design and packaging to cut down dependence on imports.

By February 19, 2022, the Indian government confirmed that the India Semiconductor Mission had received applications from five companies to establish electronic chip and display manufacturing plants with an investment of approximately US$20.5 billion. The companies that were revealed include Vedanta Foxconn JV, IGSS Ventures, ISMC which proposed to set up electronic chip manufacturing plants with an investment of US$13.6 billion.

The three said companies have also sought support of US$5.6 billion from the government under the US$10 billion worth Semicon India Program. “The applications have been received for setting up 28 nanometer (nm) to 65 nm semiconductor fabs with capacity of approximately 120,000 wafers per month,” the statement said. 

The government is providing financial support of up to 40% for chips above 28 nm to 45 nm and up to 30% for setting up manufacturing units for 45 nm to 65 nm wafers. Separately, Vedanta and Elest have proposed to set up display manufacturing units — with projected investment of US$6.7 billion. 

They have also sought support of US$2.7 billion from the government under the scheme for setting up display fabs in India. “Despite aggressive timelines for submission of applications in this greenfield segment of semiconductor and display manufacturing, the scheme has elicited good response,” the Ministry of Electronics and Information Technology said in the statement.

Although the government closed the first round of application window for the Semicon Programme recently, on February 15, it plans to start another round based on interest from the industry. Besides electronic chip and display plants, four companies — SPEL Semiconductor, HCL, Syrma Technology and Valenkani Electronics — have registered for semiconductor packaging. 

The Minister in fact had announced in January that it is also seeking applications from 100 domestic companies, start-ups and MSMEs under its Design Linked Incentive (DLI) Scheme, which is part of the Program for Development of Semiconductors and Display Manufacturing Ecosystem in India.

So far, the statement indicates that three companies — Terminus Circuits, Trispace Technologies and Curie Microelectronics — have submitted applications under the Design Linked Incentive Scheme. At this point, the government will negotiate the structure and quantum of fiscal support with the applicants. 

Local media reports suggest that the fiscal support under the scheme shall be provided on pari-passu basis for a period of six years from the date of approval. At this juncture, the government of India predicts that the South Asian nation’s semiconductor market is estimated to be valued at US$63 billion by 2026 compared with US$15 billion in 2020.

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