Israeli chipmaker Tower closes in on $8 billion fabrication plant in India

Israeli chipmaker Tower closes in on $8 billion fabrication plant in India

Israel-based chip manufacturing company Tower Semiconductor has submitted its proposal to set up a chip fabrication plant in India worth around $8 billion, The Indian Express has learnt. The government is assessing its pitch and is hoping to clear it before the model code of conduct kicks in ahead of this year’s general elections.

If Tower’s proposal is accepted by the government, it would be the first semiconductor company with real fabrication pedigree to join India’s $10 billion chip manufacturing scheme, and will be a big boost to New Delhi’s chipmaking ambitions.

The scheme promises a 50 per cent capital expenditure subsidy to successful applicants – meaning that if Tower’s plant costs $8 billion, the Centre will shell out $4 billion from its kitty. Any state where the chip foundry could be located may give additional benefits to the company.

Tower is looking to manufacture 65 nanometre and 40 nanometre chips in India which may be used in a number of sectors, including automotive and wearable electronics.

Minister of State for Electronics and IT Rajeev Chandrasekhar had last October met Tower’s CEO Russel C Ellwanger to discuss its partnership with India in the chip space.

Tower Semiconductor did not respond to a request for comment.

Tower had earlier applied to the scheme to set up a $3 billion plant in Karnataka in partnership with international consortium ISMC. However, the plan got stuck due to the company’s then impending merger with Intel. Last August, Intel cancelled its plan to acquire Tower Semiconductor for $5.4 billion due to regulatory issues.

The planned merger between Intel and Tower, announced in February 2022, passed an antitrust review in the United States and several other geographies. But it ran into a lengthy delay in China, where regulators review mergers of companies that earn a certain amount of revenue in the country.

On Friday, CG Power and Industrial Solutions said it has entered into a joint venture (JV) agreement with Renesas Electronics America and Thailand-based Stars Microelectronics to set up a semiconductor assembly and testing plant in India

While India has managed to attract big names such as Micron Technology to set up a chip packaging plant in the country, it is yet to clear a proposal to set up a full fledged fabrication plant.

While securing Micron’s $825 million investment commitment for its packaging plant was a big win for India’s chip ambitions, having a chip foundry would be a big milestone and help draw further investments in the chip space.

A joint venture between Foxconn, best known as the manufacturer of iPhones, and Vedanta to set up a $19.5 billion chip plant came to an abrupt halt last year. Foxconn announced it was pulling out of the joint venture with Vedanta. While government sources maintain the two could apply separately, there has been no movement so far.

There was a third fab proposal by Singapore-based IGSS Venture, but it was not found up to the mark by the advisory committee of the government and is on the back burner, it is learnt.

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