By GANDHINAGAR, India, July 26 (Reuters) – In a bid to bolster India’s burgeoning chip industry, executives from tech giants Foxconn, Micron, and AMD are set to gather in Prime Minister Narendra Modi’s home state for the annual SemiconIndia conference. The Indian government’s ambition is to establish the country as a prominent semiconductor manufacturing hub, aiming to rival the likes of Taiwan. The potential for growth is immense, with experts predicting that the local chip market will soar to a staggering $80 billion by 2028, nearly four times its current size of $23 billion.
However, despite the promising vision, Modi’s plan has encountered challenges. In 2021, the government introduced a $10 billion scheme to incentivize domestic chip manufacturing, attracting interest from companies like Foxconn and local conglomerate Vedanta Ltd. Despite the initial enthusiasm, none of these proposals have come to fruition, and progress has been sluggish. Foxconn, for instance, recently withdrew from a $19.5 billion chips joint venture with Vedanta, citing concerns about the project’s slow pace, opting to pursue its chip-making endeavors independently.
Other attempts at investment, such as those involving Israel’s Tower Semiconductor, have also stalled. This has left the Indian government seeking new ways to entice companies to invest in the country’s chip sector, culminating in the issuance of another invitation for chip incentives.
Notwithstanding these setbacks, there have been some positive developments. US-based Micron, for instance, announced in June that it will invest $825 million in building its first chip testing and packaging factory in Gujarat. While this is a step in the right direction, it falls short of actual chip manufacturing, leaving a gap in India’s ambition to become a full-fledged semiconductor producer.
The SemiconIndia conference, set to be inaugurated by Prime Minister Modi, promises to bring together industry leaders and experts from 23 countries. Despite the interest in the potential Indian market, the country’s credentials as a semiconductor manufacturer are yet to be fully established. Investors continue to face challenges, including bureaucratic hurdles with slow approvals from various levels of government and the lack of a reliable supply chain for raw materials.
Arun Mampazhy, a former India manager of U.S.-based chipmaker GlobalFoundries, expresses the skepticism of global chip giants to invest in India, emphasizing that it remains an untested ground. However, the high demand for chips and the country’s growing technological prowess make it an attractive destination for potential investors.
As the SemiconIndia conference commences, stakeholders in the Indian chip industry hope to address these challenges, seeking ways to bolster the sector’s growth and solidify India’s position as a significant player in the global semiconductor market. The government’s continued efforts to attract investments and streamline processes will play a crucial role in determining India’s success in achieving its ambitious vision for the chip industry. Only time will tell if India can overcome these hurdles and emerge as a formidable force in the world of semiconductor manufacturing.
