Tata commits to semiconductor factory in Gujurat, India

Business news | January 11, 2024

By Peter Clarke

silicon India semiconductor

Natarajan Chandrasekaran, chairman of India’s steel-to-automobile conglomerate Tata Group, has said that his company is on the verge of concluding negotiations for a “huge semiconductor fab” in Dholera, Gujurat, India.

Chandrasekaran, speaking at the Vibrant Gujarat Global Summit in Gandhinagar and in the presence of Indian Prime Minister Modi, said he expects negotiations to be concluded soon and work to begin in 2024. Chandrasekaran did not make it clear whether he was referring to a chip packaging plant or a wafer fabrication plant or what parties are in negotiation.

The term ‘fab’ – for fabrication – is usually used to reference a wafer fabrication unit. Such a factory is a much more technically demanding than a packaging and test plant. It is roughly an order of magnitude more expensive to build, typically costing several billion dollars even for trailing-edge manufacturing technology.

Not the first time

This is not the first time Chandrasekaran has indicated a desire for his company to move into the semiconductor sector (see Tata plans to make semiconductors in India and Tata in talks over $300 million Indian chip packaging factory). Previously Chandrasekaran had said Tata might make progress in semiconductors by way of acquisition (see Tata ready to buy its way into semiconductors: report).

In April 2023 Chandrasekaran was quoted saying: “The next stage will be semiconductor testing. Then fabless – we will do the design. And then we get into the fab. Those are the stages of integration we will go through.”

Tata Group is the second Indian conglomerate to try drive the country into semiconductor manufacturing in recent years, after decades of failed attempts. Vedanta Group has also shown interest in chip manufacturing, having applied for subsidy from a government-funded $10 billion incentive scheme. However Vedanta’s partner in its bidding consortium pulled out in 2023 (see Foxconn pulls out of Indian wafer fab venture).

The most successful attempt to kick-start India’s semiconductor aspirations has been provided by US memory chip manufacturer Micron Technology Inc. with a heavily subsidized chip packaging factory being constructed in Sanand, Gujurat (Micron breaks ground on US$2.75 billion Indian chip packaging fab). Sanjay Mehrotra, CEO of Micron, was in the audience in Gandhinagar.