The Tata group will make Assam a major player in sophisticated semiconductors, says Ratan Tata, chairman emeritus of Tata Sons.

"This new development will put Assam on the global map," the octogenarian industrialist who led the $150-billion Tata Group for decades says in a post on X.

Tata Semiconductor Assembly and Test Pvt Ltd (TSAT) will set up a semiconductor unit in Morigaon, Assam, with an investment of ₹27,000 crore.

The Tata group is also building the country's first semiconductor fab in Gujarat's Dholera. Tata Electronics has partnered with Taiwan's Powerchip Semiconductor Manufacturing Corporation (PSMC) to set up ₹91,000-crore fab in Prime Minister Narendra Modi's home state. The unit is expected to produce 50,000 wafer starts per month (WSPM) of 28-nanometre chips for electric vehicles, telecom, defence, consumer electronics, display, and power electronics among other sectors.

After watching the global chip race from the sidelines for decades, India has finally decided to build chips from scratch. Supply chain disruptions during the Covid-19 pandemic forced a rethink on the importance of the local semiconductor industry. With incentives worth ₹76,000 crore, the Narendra Modi government wants companies to manufacture chips in India. The government is looking to subsidise half the cost of the approved projects.

Chips power everything from smartphones to cars. They are also used by the booming artificial intelligence (AI) industry. A domestic chip industry is expected to reduce reliance on imports, besides de-risking supply chains.

Tata Electronics became the first Indian company to produce Apple iPhones after it acquired a 100% stake in Wistron Infocomm Manufacturing (India) in November last year. India's upcoming chipmaking industry is expected to reassure foreign companies that are looking to diversify manufacturing away from China.

Building From Scratch

India is working on the entire semiconductor value chain, starting with design. The next part of the value chain is semiconductor fab followed by assembly, testing, marking, and packaging (ATMP).

"If you look at the design ecosystem, close to 30% of the global talent is in India. Some of the most complex chips are designed in India," says Union minister for Railways, Communications, and Electronics & IT Ashwini Vaishnaw.

India will move from being a back office in semiconductors to creating a product development ecosystem, says the Union minister.

"We are moving from design to fab to the ATMP ecosystem. Throughout this value chain, all the components will be developed in India. We have our strength in design. Now, as a natural corollary, we have to build the strength in fab and ATMP. We need to be in all three parts of the value chain and that's what we are working on," says Vaishnaw.

India has a roadmap to develop the semiconductor industry over the next 20 years, says the Union minister. "Within the next five years, our target is to have 3-4 high-volume fabs and create a niche and leadership in at least one product category. That is the way we are working. We will see the first chip rollout in December 2024," he says.

Computer memory producer Micron Technology last year announced plans to build a chip assembly and test facility in Gujarat with an investment of $825 million. Micron will receive 50% fiscal support for the total project cost from the central government and incentives representing 20% of the total project cost from the state of Gujarat. The combined investment by Micron and the two government entities will be up to $2.75 billion.

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