The first semiconductor chip from the new plant being set up by the Tata Group and Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) in Gujarat’s Dholera, will be ready to roll out by the end of 2026, according to Frank Huang, chairman of PSMC.
Speaking exclusively to ET ahead of the ground-breaking ceremony for the $11 billion project that is scheduled for Wednesday, Huang said the contours of the JV with the Tatas are yet to be finalised. “At the moment we have decided to work out the technology transfer. Later we can talk about investment,” the 74-year-old said. PSMC is a maker of memory chips that also provides foundry services to its customers.
The central and state governments are together estimated to subsidise up to 70% of the project cost, with the Dholera unit slated to become India’s first commercial semiconductor fab – a longstanding ambition of New Delhi
Will Begin With 28nm Chips
Terming the progress at the upcoming plant as “very fast”, Huang said his company was pleased with the rapid pace at which its Indian partner, the Tata Group, was moving on the project.
“This is the beginning of India’s serious acceleration in the manufacturing and chip space,” Huang said in a virtual interaction from PSMC’s headquarters in Taiwan. “This fab will take India one step ahead. Semiconductors are an expensive business and once you have one fab, you can get two and three. That’s the future that India can look to,” he noted.
The union cabinet approved the Dholera plant along with two other chip assembly units — one by the Tata Group in Assam and the other by CG Power in Gujarat — on March 1. Ground-breaking ceremonies for all three plants will be held simultaneously on Wednesday.
“13th March, 2024 — a special day in India’s efforts to become a hub for semiconductors. Tomorrow, will take part in ‘India’s Techade: Chips for Viksit Bharat’ programme and lay the foundation stones for three semiconductor facilities worth over Rs 1.25 lakh crore,” Prime Minister Narendra Modi Tuesday wrote on X, formerly Twitter.
To be sure, the Taiwanese company was first approached by the Indian government in 2022 and has held discussions with other conglomerates such as the Reliance group as well.
“Several big companies wanted to get this support for a technology transfer,” Huang said. “After a review, we decided Tata is the best choice because of financing, a prestige company and the size of the company. With the kind of money they have and the government subsidy, they should be able to do the job. They are best qualified for this,” he added.
PSMC, the world’s seventh-largest pure play foundry, had announced a $5.3-billion chip manufacturing plant in Japan last October. The Hsinchu, Taiwan-headquartered company reported net sales of NT$3.429 billion in 2023.
ET was the first to report on February 20 that the Tata Group was exploring partnerships with Taiwanese chipmakers like PSMC for the chip fabrication plant at Dholera. A partnership with a chipmaker with licence-grade semiconductor technology is a prerequisite to draw incentives under the $10-billion India Semiconductor Mission. These incentives can amount to 50% of capital subsidy by the central government along with 15-25% by the state government. The Gujarat government is offering close to 20% capital subsidy to companies setting up chip units in the state.
Several consortiums have failed to make the cut due to their inability to get a technology partner onboard.
In July last year, Foxconn called off its $19.5 billion semiconductor joint venture with metals-to-oil conglomerate Vedanta. In January this year, Foxconn partnered with HCL Group to start chip packaging and testing venture in India, expanding its semiconductor ambitions.
Modest Start
Huang said the upcoming semiconductor fab with Tata Group in Dholera will begin by manufacturing 28 nanometer chips.
“We will provide Tata with the fab, which is what we do in Taiwan,” he explained. “At this moment, from our perspective, I think 28nm should be fine and then we can start to move down in the future till 22nm. I think for the Indian supply chain, this is sufficient. We don’t need that much of a high-end chip. Several years after, we will go to higher end chips.”
Earlier, in a statement during the formal announcement of the fab, the Tata Group had said its semiconductor fab would manufacture chips for applications such as power management IC, display drivers, microcontrollers (MCU) and high-performance computing logic. This was to address growing demand in markets across automotive, computing and data storage, wireless communication and artificial intelligence.
Huang said that talent was a huge draw for the Taiwanese company to partner with the Tata Group.
“One of the important jobs is training Indian engineers in Taiwan on fabs. For this type of large-scale project, it will require time. Once the ground-breaking is done, we can start,” he said.
In response to a query on why PSMC did not partner with companies such as Foxconn which also has fab ambitions, Huang said the iPhone-maker has expertise in manufacturing of mobile phones but “does not have expertise in chip manufacturing”.
On its part, Tata Electronics has been aggressive with its plans, hiring former Intel Foundry Services president Randhir Thakur as its chief executive officer last April. Industry watchers said Thakur’s appointment signalled the conglomerate’s serious intent to make a mark in the semiconductor and electronics business. More recently, in January, ET had reported that Srinivas Satya, who was the former country president of the semiconductor products group at Applied Materials has joined Tata Electronics as the chief supply chain officer and president of the components business at the company.
