India Semiconductor Mission: Semiconductor Mission-2 may focus on compound fabrications, silicon photonics

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The government will likely keep the financial incentives for semiconductor chip packaging units at a bare minimum under the second phase of the India Semiconductor Mission (ISM), people in the know told ET.

Much of the funds and incentives being planned under the second phase of India’s ambitious programme to set up a semiconductor ecosystem from scratch will be dedicated to getting more compound semiconductor fabrication and silicon photonics companies to the country, they said.

The Ministry of Electronics and Information Technology, which is the nodal ministry for the implementation of the ISM, is of the opinion that once the bigger players in the compound and silicon photonics space set up their projects in India, it will be easier for the country to attract other top companies from the semiconductor ecosystem, including the outsourced assembly and testing (OSAT) as well as the assembly, testing, marking and packaging companies (ATMP) firms.

“All four projects we had announced under phase one have been launched and we expect these plants to go live over the next 12-18 months. The three OSAT and ATMP projects will start production very soon. So, our focus for the next phase should be more concentrated on the big-ticket names,” a senior government official said.

Currently, the central government offers a flat 50% of the project cost as incentives for both chip fabrication and packaging units on a pari-passu basis. State governments where these units are being set up offer additional incentives in the form of tax breaks, and water and power at low rates, among others.So far, India has four ISM approved semiconductor units that are under different stages of construction: one chip fabrication unit at Dholera in Gujarat, and three chip packaging units with two of them at Sanand in Gujarat and the other at Morigaon in Assam. The proposed cumulative investment in these units is ₹1.48 lakh crore, according to government data.Under the ₹76,000 crore Indian Semiconductor Mission, India aims to start building a robust semiconductor chip manufacturing and packaging ecosystem. The project was announced in December 2021.

The first major success was nearly 18 months later when US-based Micron announced in June 2023 that it would set up an OSAT unit at Sanand.

The total investment in the plant is proposed to be $2.75 billion of which Micron will invest $825 million while the rest will be a combination of central and state government incentives.



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