India's first-round of chipmaking incentive scheme hits obstacles

Jingyue Hsiao, DIGITIMES Asia, Taipei 0

Credit: AFP

India's semiconductor manufacturing incentive scheme attracted applications from three conglomerates when it was announced in early 2022. The application by ISMC is reportedly stalled, which may further delay India's ambition to build a self-reliant chipmaking ecosystem.

Reuters quoted three sources saying that the application by ISMC, a consortium formed by Tower Semiconductor and Next Orbit Ventures, was stalled as the consortium is waiting for the acquisition deal of Tower Semiconductor by Intel to be completed before advancing the ISMC application process. Intel CEO visited China in April, reportedly looking to push forward the Chinese government's approval of the acquisition deal.

Besides, another source told Reuters that the progress of the planned project by Vedanta-Foxconn Semiconductors is also moving at a sluggish pace. Bloomberg earlier quoted sources reported that the application by Vedanta-Foxconn Semiconductors might be rejected by the Indian government as the joint venture had not secured the necessary technologies for its 28nm process technology.

According to Reuters, a source said that although STMicroelectronics agreed to participate in the Vedanta-Foxconn Semiconductors project but refused to play a bigger role in the project as the Indian government wished before the Indian market matures. In addition, The Economic Times reported in April that STMicroelectronics planned to restrict the extent of the technology transfer and implement a sunset clause regarding the duration of the joint venture, perhaps in 5-10 years.

IGSS, the third applicant for the INR760-billion Modified Semicon India Program, planned to refresh its application for incentives, Reuters reported earlier.

India announced the Semicon India Program to encourage locally-made chips and displays by offering a 50% incentive on the project cost in December 2021 and opened the application for 45 days in January 2022. The short window was seen as a reason why India did not win global chip giants' support, such as Intel, GlobalFoundires, and TSMC, to apply for the incentive scheme.

According to the Press Bureau of India, the Ministry of Electronics & IT reopened the Modified Semicon India Program application on May 31.