Israeli chipmaker Tower Semiconductor is on the brink of establishing an $8 billion chip fabrication plant in India. This move could mark a significant milestone in India’s $10 billion chip manufacturing scheme and bolster New Delhi’s chipmaking aspirations.
Tower’s Proposal and Potential Impact
Tower Semiconductor has proposed to set up a chip fabrication plant in India worth approximately $8 billion. The government is currently evaluating the proposal, aiming to approve it before the onset of this year’s general elections. If accepted, Tower would become the first semiconductor company with real fabrication pedigree to participate in India’s chip manufacturing initiative. The scheme offers a 50% capital expenditure subsidy to successful applicants, potentially amounting to $4 billion from the government’s coffers for Tower’s $8 billion plant. Moreover, the company’s plan to manufacture 65-nanometre and 40-nanometre chips in India could find applications across sectors like automotive and wearable electronics.
Past Attempts and Future Prospects
Previously, Tower Semiconductor had applied to establish a $3 billion plant in Karnataka, but the plan was hindered due to the company’s impending merger with Intel. However, with the merger falling through last August, Tower is now pursuing its India expansion independently. This comes amid India’s efforts to attract major players in the semiconductor industry. While India has successfully lured investments from companies like Micron Technology for chip packaging plants, the establishment of a full-fledged fabrication plant remains pending. Notably, a joint venture between Foxconn and Vedanta for a $19.5 billion chip plant was discontinued, underscoring the challenges in realizing such ambitious projects.