Israel's Tower proposes $8 bn chip manufacturing facility in India: report

Israel-based chipmaker Tower Semiconductor has proposed to set up an $8 billion chip fabrication facility in India, under the $10 billion chip manufacturing scheme of the Government of India, reports citing official sources said on Sunday.

The government is in the process of assessing details of the proposed project and if found eligible for concessions for semiconductor manufacturing, could give an early go-ahead in view of the upcoming general elections, say reports.

Tower Semiconductor is a well-integrated centre for semiconductor solutions and advanced analog integrated circuits with high-quality and innovative technological and manufacturing capabilities. Tower, will be the sole company to set up manufacturing facility for semiconductors in India as other foreign investors are only packaging their products. 

Tower is looking to manufacture 65 nm and 40 nm chips in India, which may find use in a number of sectors, including automotive and wearable electronics. If the proposal is accepted by the government, it will give a major thrust to the government’s semiconductor manufacturing programme.

With the Indian government’s scheme of 50 per cent capital subsidy for semiconductor production, Tower, if successful, will find its investment expenditure halve to $4 billion. The company will also be eligible to additional benefits that state government provides.

Tower had earlier come up with a proposal for setting up a $3 billion chip plant in Karnataka in partnership with international consortium ISMC. The company could not proceed with the investment proposal due to its planned $5.4 billion merger with Intel. However, Intel had to cancel plans to acquire Tower Semiconductor due to regulatory issues in China.

In October, last year, minister of state for electronics and IT Rajeev Chandrasekhar had met Tower’s CEO Russel C Ellwanger to propose investment in India under the government’s incentive scheme for semiconductor manufacturing in the country.

While India has managed to attract investments big names in semiconductor space such as Micron Technology, the country has so far not succeeded in attracting investment in a full-fledged fabrication facility.

A proposed joint venture between Taiwanese company Foxconn and Vedanta for setting up a $9.5 billion chip plant fizzled out as Foxconn decided to pull out of the joint venture.

Another proposal by Singapore-based IGSS Venture did not meet the eligibility criteria set by the government.