ISMC to invest $3 billion in Karnataka to set up India’s first chip-making plant


International semiconductor consortium ISMC, a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor, will invest $3 billion in Karnataka to set up India’s first chip-making plant, the state government said on Sunday.

The announcement indicates that the incentive structure being put in place by the government to make India a semiconductor hub is beginning to fructify.

Intel had recently announced plans to acquire Tower Semiconductor.

ISMC’s proposed 65-nanometer analog semiconductor fabrication unit is expected to employ 1,500 people directly over seven years, the state government said, adding that another 10,000 jobs will be created in the ancillary ecosystem.

The chip makers’ consortium has requested for 150 acres of land in Mysuru’s Kochanahalli Industrial area for the unit.

Additional chief secretary for IT and bio-technology EV Ramana Reddy and ISMC director Ajay Jalan signed a memorandum of understanding in the presence of chief minister Basavaraj Bommai.

Bommai said, “This MoU is a significant amid the competition among various states to attract semiconductor fabrication units. Karnataka understands that it’s not just the fiscal incentives that matter but availability of conducive ecosystem and overall ease in operations are also important.”

Union finance minister Nirmala Sitharaman, during her recent visit to the US, called on American semiconductor firms AMD, Western Digital and Micron Tech to boost investments in India, taking advantage of a Rs 76,000-crore production-linked incentive scheme for large chip makers. Apart from these firms and Intel, New Delhi has also urged GlobalFoundries and Taiwan Semiconductor Manufacturing Co to scale up their operations in the country.

ISMC and homegrown metals-to-energy conglomerate Vedanta have applied for India’s incentives to companies setting up semiconductor and display operations in India.

Vedanta told Reuters on Saturday it was in “advanced talks” with Gujarat, Maharashtra and Telangana to choose a site by mid-May. It has a planned investment outlay of $20 billion for its semiconductor and display push.

Last Friday, while speaking at the Semicon India-2022 conference in Bengaluru, prime minister Narendra Modi called upon the industry to make India a “global hub for semiconductors.” Stating that the government had “put the odds in the (chipmakers’) favour as far as possible through a supportive policy environment,” Modi said collective efforts were being made to make India a key constituent in global semiconductor supply chains. Modi also hard-sold the country to global investors citing its “exceptional semiconductor design talent and the fact that a fifth of the world’s engineers belonged to India.

India’s semiconductor market is forecast to grow to $63 billion by 2026 from $15 billion in 2020.

Although the government is yet to finalise the beneficiaries under the PLI scheme, sources from the ministry of electronics and IT (Meity) said final selection of companies will be done after analysing all aspects — such as investments, technology partners and manufacturing roadmap etc.

In February, five companies had submitted proposals for setting up manufacturing units with investment of Rs 1.53 trillion.

Under the production-linked incentive scheme, the government will extend financial support of up to 50% of project cost for at least two semiconductor and two display fabs, for a minimum of six years. For others, like compound semiconductors, sensor fabs etc, fiscal support of 30% will be offered.

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