NEW DELHI: The country will soon announce its first semiconductor fabrication (fab) and packaging unit, tells Union Minister of State for IT and Electronics Rajeev Chandrasekhar in an interaction with this newspaper. The minister claims that after the first fab unit is announced, people will realise that India is serious (about building the semiconductor industry).
As the first phase of the performance-linked incentive (PLI) scheme for semiconductors got off to a slow start with only one player announcing plans to set up a unit, the minister said the government will keep the scheme open till all the allocated funds ($10 billion) are exhausted. “We will invite more fab (manufacturers) and will support them,” he says.
The window was open for 45 days in the first instance. Two out of those three applications in the fab section could not be processed for various reasons. The application from a consortium of Vedanta and Foxconn was considered and processed.
However, nothing much has happened on the ground since the consortium announced the setting up of a plant in Gujarat in September 2022. Explaining the delay, Chandrasekhar says neither Vedanta nor Foxconn has any (fab) manufacturing technology, so they had to negotiate it with firms like Global Foundries, ST Microelectronics, and Intel that have this technology. He attributed the complex nature of semiconductor manufacturing to the slow progress.
“This is not something like setting up a small factory. Fab is a very complex high-tech manufacturing. We are trying to do in a few years what we have not been able to do for decades,” reiterates Chandrasekar. He said the selection of proposals is being done by a group of advisors, who are top minds in the world. “They have looked at every proposal, and they will now invite more proposals. This is not like a tender, where you open it and tomorrow 10 people will come. There are only a few companies working in this sector,” he says, adding that incentives for semiconductor manufacturing are also given by the US, EU and Japan and India has an edge over others in design innovation. In design innovation, the government has funded 8 start-ups.
As per him, India is attracting large electronics manufacturers (Cisco to manufacture in India), and as more big companies come, the attractiveness for semiconductor companies will grow. He says the trend for Indian start-ups to park their money in the US has come to a halt after the collapse of First Republic and Silicon Valley Bank. “So, the confidence that Indian start-ups have in the Indian banking system is a lot more than they have in any other international banking system,” he says.