The Indian government has approved a stepped incentive plan to encourage the building of wafer fabs to address different technology nodes. However, another objection was that the scheme is skewed towards 28nm nodes and away from operations that could make chips at 65nm and above.

The incentive scheme is part of the detail revealed by the Indian government as it approved and launched a US$10 billion incentive scheme intended to prompt inward investment into semiconductors, displays and electronic design over the next six years (see Report: India plans $10 billion semiconductor subsidy).

The highest levels of wafer fab incentive scheme are set at up to 70 percent support for fabs capable of making 28nm technology or below and would reduce for 45nm to 28nm and reduce again for 65nm to 45nm.

The government support would be set at 50 percent for 28nm and below, then 40 percent at 45nm to 28nm and 30 percent at 65nm to 45nm, while the hosting Indian state could offer additional top-up incentives. Several states have already announced 10 to 15 percent subsidies on capital expenditure.

Under the scheme at least ten semiconductor manufacturers are expected to set up factories in India in the next two to three years, according to Indian Information and Technology Minister, Ashwini Vaishnaw being quoted in a Bloomberg report.

However, it is understood that in return for financial support the Indian government is requiring an equity stake in the company building the wafer fab. Some observers have pointed out that this dilutes the value of the subsidy and reduces the attractiveness of the scheme, compared with what may be on offer elsewhere in the world.

Companies with an interest in applying to join the scheme will have 45 days from January 1, 2022 to do so.

The Indian government has tried to encourage the building of wafer fabs multiple times in the past but the schemes have failed, sometimes after achieving outline agreement, due to slow bureaucratic deliberations and an inability to push through land acquisition and planning approvals.

Israel’s Tower Semiconductor is a technology partner in a consortium floated by Abu Dhabi-based Next Orbit Ventures, which pitched to build a $3 billion analog 65nm wafer fab in Dholera, in Gujarat. The association between Tower and New Orbit Ventures dates back to 2017 but the team has been unable to follow through with its plans (see Indian analog wafer fab plan stuck in neutral).

Related links and articles:

Report: India plans $10 billion semiconductor subsidy

Tata in talks over $300 million Indian chip packaging factory

Report: India pushing to prep chip manufacturing incentive plan

India asks Taiwan to include wafer fab in trade deal

Indian analog wafer fab plan stuck in neutral

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