Idaho-based semiconductor giant, Micron’s plans to invest $2.7 billion in India could localise 10 to 15 per cent of the components imported for electronics manufacturing in India. 

On the occasion of Prime Minister Narendra Modi’s first state visit to the United States, two of the States’ largest semiconductor companies have announced significant investment plans for the country. On Thursday, US semiconductor toolmaker Applied Materials announced its plans to invest $400 million over the next four years in a state-of-the-art engineering center in India. While, memory chip maker, Micron committed $800 million for a new chip facility in Gujarat, which totals its investment plans in the country to be around $2.75 billion. 

Experts that businessline spoke with said that packaging and designing semiconductor products in India could bode somewhat well for India’s electronics ecosystem, which has been trying to localise components to India for many years.  India should not depend on multinational companies to pursue its ambitions to become a hub for semiconductor manufacturing but should encourage local players to take the lead, Raja Manickam, Chief Executive Oficer, TATA Outsourced Semiconductor Assembly and Test (OSAT).l said recently in a conversation with businessline.

If investment plans by these semiconductor companies materialise, experts predict that around 10-15 per cent of components for electronics manufacturing that are imported could be localised. Or would it at least be independent of  on Taiwan? Micron is setting up a semiconductor fabrication unit in the United states, and material is likely going to be imported from there to be assembled or packaged in Indian facilities as memory chips or SSDs (solid state devices). 

While the announcements on Thursday could boost semiconductor manufacturing in India, the core issue around the need for a proper semiconductor fab in India remains unresolved.

Another expert said that it is unlikely that the interest from American companies in Indian manufacturing will translate into a propensity to invest more in building semiconductor fabs. Only a month ago, India had to re-open the application process for $10 billion in incentives and assistance to encourage chip manufacturing, as previously announced projects should be shorter. . Another interesting consequence of Micron’s investment plans into the country could be that it could bode well for the solar industry, as some experts predict that products localised by Micron could cut the cost of making photovoltaic cells by half.

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