India Announces $10 Billion Package To Lure Global Chipmakers

India rolled out the red carpet for global chipmakers with an incentive package of 760 billion rupees ($10.2 billion) as Prime Minister Narendra Modi pushed the country to become a high-tech production hub, Nikkei reported on Jan. 19.

The plan was approved by Cabinet on December 15, and applications were opened on January 1, the report said. This shows that India, like many other countries, is stepping up its efforts to increase the domestic supply of critical electronics industry components.

The new package covers up to half the initial cost of setting up a chip manufacturing center in the country, including front-end processes for wafer fabrication. The Indian government will work with state authorities to establish high-tech industrial parks equipped with clean water sources, adequate electricity and logistics infrastructure.

In addition, India will help with back-end chip facilities responsible for chip assembly and testing, as well as support chip design start-ups and develop more talent to build a fully integrated semiconductor industry in the country.

The report pointed out that this is not the first time India has tried to attract top chipmakers, but few companies have expressed strong interest in the past. One option for the country this time may be to focus first on back-end processes in order to build rapport with industry leaders before diving into more technically-complex front-end processes.

“So far, the response has been very good,” Ashwini Vaishnaw, India’s minister of electronics and information technology, told Bloomberg after the package was announced. Build their branch.”

Vaishnaw predicts that within two to three years, several semiconductor factories will start production, while a display panel factory will be nearing completion.

Rhandir Thakur, head of Intel’s foundry business, later tweeted that he was pleased “to see India making plans for all aspects of the supply chain, including talent, design, manufacturing, testing, packaging and logistics”.

“Intel – Welcome to India,” Vaishna responded. Although the exchange sparked speculation that Intel wants to build a new chip manufacturing center in India, the company said it currently has no plans to build a new factory in India.

The speculation comes amid questions about whether monetary incentives alone will be enough to support India’s chip supply, the report said. Because only Japan, Taiwan, South Korea, Singapore, Malaysia and mainland China have established chip industries including front-end manufacturing in Asia.

India has said securing the land, water, electricity and talent needed for chip-making projects will be a national priority. But its past attempts to attract major foreign chipmakers have often failed because of one of these factors, such as residents’ opposition to land use, or the state temporarily changing labor rules.

Industrial relations can be a challenge in India. Two Taiwanese iPhone assemblers, Foxconn and Wistron, for example, have been mired in workers protesting labor conditions in the country.

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