India will pay for 70% of Micron’s $2.75 billion packaging plant

Business news | June 22, 2023

By Peter Clarke

Memory chip maker Micron Technology Inc. (Boise, Idaho) has said it will receive a subsidy worth 70 percent of the US$2.75 billion cost of building and equiping a chip packaging plant in Gujurat, India.

Micron confirmed the plan to build a DRAM and NAND assembly and test facility in Gujurat – the first in India – as President Modi of India was visiting with US President Biden. The facility will take DRAM and NAND wafers in and produce ball grid array (BGA) ICs, memory modules and solid-state drives.

Construction of the facility is expected to begin in 2023. Phase 1 calls for 500,000 square feet of cleanroom space and is due to become operational in late 2024, and Micron will ramp capacity gradually. Phase 2 would include construction of a facility similar in scale to Phase 1 and Micron said expects to start that towards the second half of the decade.

The extreme level of subsidy that Micron will receive means that it will only have to pay $825 million over the two phases of a project that is expected to create 5,000 direct jobs and 15,000 indirect jobs over several years.

Micron said that under the Indian government’s ‘Modified Assembly, Testing, Marking and Packaging (ATMP) Scheme’ it will receive 50 percent fiscal support for the total project cost from the Indian central government and incentives representing 20 percent of the total project cost from the state of Gujarat.

Sanjay Mehrotra, CEO of Micron, met Prime Minister Narendra Modi in Washington DC on Wednesday shortly after PM Modi had been received by President Biden.

Mehrotra meets Modi

“I had an excellent meeting with PM Modi. I am very impressed with the vision that he has for India and the advances that India is making. We discussed a wide range of topics and we really look forward to greater opportunities in India,” Mehrotra was quoted saying after the meeting. In a statement Mehrotra said: “I am grateful to the Indian government and all of the officials involved that made this investment possible.”

Shri Ashwini Vaishnaw, India’s Cabinet Minister for Railways, Communications, Electronics and IT, said: “This investment will be a crucial building block in the country’s blossoming semiconductor ecosystem.”

The announcement of the unit was expected (see Micron’s $1bn Indian chip packaging plant close to approval) although the level of subsidy is unusually high. But securing investment from a major chip company such as Micron could be key to getting other companies to site wafer fabs in India.

India has an incentive scheme that has failed, so far, to attract any industry leaders to commit to Indian inward investment (see India calls for fresh bids for wafer fab subsidies).

At the same time Micron has had a troubled history of inward investment in China. Only a matter of days ago Micron said it would expand its packaging facility in Xi’an, China (see Micron tips China packaging plan as politicians meet). It plans to spend about US$600 million there.