The first signs of localisation of the semiconductor ecosystem are beginning to show up. After Micron announced its plans to set up a packaging and testing unit in India, at least 4 to 5 of the top suppliers of components and materials to the semiconductor industry are set to follow suit, according to top industry sources.

Players like Simmtech and Air Liquide that provide printed circuit boards and high-purity industrial gases for chip manufacturing, respectively are in talks with the government to start operations in India.

One of these suppliers, Simmtech has also likely received approval from the government, as it plans to set up a unit in the industrial town of Sanand, along with Micron, as per the source. 

Co-location investment

“We are now evaluating and preparing for another co-location investment with Micron. The key consideration is whether we can receive the same level of support from the local government. We would like the local agencies to view our project not as a standalone project, but as a part of the entire supply chain,” said Jeffery Chun of Simmtech. 

Chun said, “Our co-location project is focussed on our global customer’s movement. But at the same time, we understand that especially in India, there is a huge demand for our products printed circuit boards and IC substrates.” 

Top government officials told businessline that the electronics industry, especially for laptops and mobile phones, will benefit from the localisation of the production of printed circuit boards, which invites a huge custom levy when imported.

Another company, which is likely in discussions with the government is the provider of high-purity industrial gases, Air Liquide.

Raja Vinay, business development lead at Air Liquide, said, “We are keenly looking at the developments and rapid strides of the semicon sector and we will contribute to the development of this ecosystem.”

Capex subsidy

However, like Micron, the ecosystem players are also betting on receiving support from the government. Vinay said the government should consider extending the capex subsidy benefits and provide land allocation and uninterrupted power supply to the new units.

Kulicke & Soffa, which supplies equipment solutions for chip packaging, could also be in the fray to start India operations.  Chan Pin Chong, Executive Vice-President and General Manager of Kulicke & Soffa (K&S), said that they would not want to be inhibited by import duties.

“From a regulatory perspective, it’s important to understand we get the parts in and out in the region hubs. For example, when you run a 24x7 factory in Gujarat, we would like to see how we can move-in parts and storage without being inhibited by import duties and regulatory things that can slow down the process,” he said.