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India’s $15.2 Billion Semiconductor Investment to Propel AI Development

Last Updated March 6, 2024 6:19 PM
Samantha Dunn
Last Updated March 6, 2024 6:19 PM
Key Takeaways
  • India’s Union Cabinet has approved plans to develop three semiconductor units.
  • This aligns with India’s goal to become a global semiconductor hub, to rival the U.S., Taiwan, and South Korea.
  • The new factories are expected to create 20,000 advanced technology jobs and about 60,000 indirect jobs.

The Indian government has recently approved the establishment of three semiconductor manufacturing facilities, representing an investment exceeding $15 billion.

The plan to transform into a major global semiconductor hub aligns with India’s broader goals in Artificial Intelligence.

India’s Government Greenlights $15 Billion Investment

Quoted by The Times of India, the Indian IT minister Ashwini Vaishnaw told reporters that the construction of all three units aims to strengthen India’s semiconductor ecosystem:

“Within a very short time, India’s semiconductor mission has achieved four big successes. With these units, the semiconductor ecosystem will get established in India. India already has deep capabilities in chip design. With these units, our country will develop capabilities in chip fabrication”

Construction for all three plants is scheduled to commence within the next 100 days, promising to create around 20,000 direct jobs in advanced technology and an additional 60,000 indirect employment opportunities.

“A typical semiconductor fab, construction is a three-four-year time frame. We will be compressing it significantly”, the minister noted.

A Joint Venture Agreement

CG Power and Industrial Solutions Limited, Renesas Electronics Corporation, and Stars Microelectronics signed a Joint Venture Agreement  to build a semiconductor assembly and test facility in India.

This agreement, approved by the Union Cabinet under India’s Semiconductor scheme, aims to bolster India’s semiconductor manufacturing capabilities, with CG holding 92.3% of the JV and Renesas and Stars Microelectronics holding 6.8% and 0.9% respectively.

Mr. S. Vellayan, Chairman, CG Power and Industrial Solutions Limited, said:

“CG’s entry into the semiconductor manufacturing marks a strategic diversification for us. Our partners, Renesas and Stars Microelectronics, will make our learning curves steeper and help us focus on innovation and excellence. This is a very exciting phase for the entire nation, and we are very keen to build out India’s semiconductor capability and ecosystem.”

The first of these facilities, a collaboration between Tata Electronics and Taiwan’s Powerchip Semiconductor Manufacturing Corp, will be situated in Dholera, Gujarat. This plant, involving nearly $11 billion in investment, will focus on 28-nanometer technology for various sectors, including automotive and consumer electronics.

In addition to the first facility, set up by Tata Semiconductor Assembly and Test Pvt Ltd in Morigaon, Assam, will invest $3.26 billion towards developing advanced semiconductor packaging technologies. This initiative will support sectors like automotive, electric vehicles, and consumer electronics.

The third factory will be located in Sanand, Gujarat. Specializing in chips for a range of applications, this factory is set to invest close to $1 billion.

India’s Global AI Plans

This strategic initiative is part of India’s broader effort to deepen its capabilities in chip design and fabrication, potentially benefiting from shifts in manufacturing bases by giants like Taiwan Semiconductor Manufacturing Company.

Global demand for semiconductor chips reflects the growing importance of artificial intelligence in various technological applications. The dependency on a few key foundries, such as TSMC, which manufactures advanced AI chips, presents a bottleneck for AI hardware production, especially for companies like Nvidia.

This move could see India becoming a key node in the global semiconductor supply chain, providing the essential hardware foundation for AI development worldwide.

Meanwhile, BharatGPT, supported by the industrial giant Reliance Industries, is gearing up to introduce its ChatGPT-like AI model, Hanooman, this March. This move is a part of India’s ambitious strategy to establish itself as a key player in the global AI landscape.

Hanooman is designed to focus on critical sectors in India, including governance, healthcare, education, and financial services, by providing innovative AI-driven solutions.

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