Tata fab in India to begin construction in mid-March, says PSMC chairperson

Monica Chen, Taipei; Jingyue Hsiao, DIGITIMES Asia 0


After announcing plans to set up fabs in Japan, Powerchip Semiconductor Manufacturing Corp (PSMC) said it will assist Tata Electronics in building India's first 300mm wafer fab in Dholera, Gujarat, with construction expected in 2024.

PSMC chairperson Frank Huang was concerned about establishing semiconductor manufacturing facilities in India. He noted that big companies were hesitant to invest there. PSMC eventually chose to lend a hand following President Tsai Ing-wen's invitation. President Tsai hopes that PSMC can lead the way for Taiwanese companies looking to expand their operations into India.

PSMC mainly assists Tata in factory construction and process technology transfer. PSMC is not worried about technology outflow, adding that Taiwan excels in technology and cost control.

Huang said the foray into India is an important step in PSMC's transformation in the Fab IP business. PSMC will not invest or operate directly but will be responsible for fab construction, process technology transfer, and employee training and receive fees for these activities.

In the meantime, multiple Taiwanese media outlets, including Tech News and Anue, quoted Huang, saying that the Indian government will provide 70% of the project cost and that the wafer fab is expected to begin construction on March 12.

Huang stated that the difference between investing in India and China lies in India's strong will to support companies as companies in China tend to replicate one another, leading to overcompetition. Besides, as PSMC is expected to profit from businesses like IP transfer, the company does not bear any operational risks in India.

On the other hand, Huang mentioned that Japan is quite proactive in the semiconductor industry, and PSMC's joint venture partner understands the Japanese market than PSMC does. However, construction costs in Japan alone are estimated to be four times higher than in Taiwan. Besides, as PSMC's joint partner in Japan is more proactive, in the long run, the company hopes to lower the stake in the joint venture, thereby reducing operational risk.

According to Huang, Taiwan is still the most competitive region in the semiconductor industry. Regarding the outlook for 2024, Huang mentioned that the market conditions would improve in the second half of 2024. In the face of competition from China, PSMC has begun to reduce orders for sensors and driver ICs, with the revenue portion estimated to decrease from 30% to 15%. Due to strong demands, the revenue portion of PMICs will increase. In the meantime, as memory demand is recovering, PSMC's customers are increasing their orders, leading to a significant increase in utilization rates, which may help the company turn a profit.

PSMC said that as tensions persist between the US and China, American firms are reducing the number of orders placed with Chinese partners. This shift is proving advantageous for Taiwan-based companies. PSMC disclosed that half of their customers' orders have been redirected from China. The company anticipates improved performance in 2024 compared to 2023, with even more promising prospects for 2025.