Micron to set up $2.75 billion India chip assembly facility

The American chipmaker will set up an assembly, testing, and packaging facility for dynamic random access memory (DRAM) and Nand flash modules in India. The plant will be established in two phases, with the first phase involving the construction of a 500,000 sq ft assembly facility in Sanand, Gujarat, scheduled to begin later this year. The second phase is expected to be implemented in the second half of this decade.

Rival US semiconductor manufacturer Applied Materials has also announced a $400 million investment to build an engineering centre in Bengaluru. The investment will be spread over four years in the engineering centre, which will be used for developing and commercializing semiconductor manufacturing equipment.

Micron will invest $825 million directly, with the remaining $2.75 billion to be contributed by the central and state governments. The US company will benefit from government incentives, under which it will receive 50% of its total project cost as financial support from the Centre. Further, the Gujarat state government will offer Micron 20% of the total project cost as an incentive.

The company said that once completed, the facility will create “up to 5,000 new, direct Micron jobs, and 15,000 community jobs over the next several years.”

Meanwhile, Applied Materials said in a statement that the new facility will seek to train “future semiconductor industry talent” and bring together “engineers, global and domestic suppliers, and top research and academic institutions.” Srinivas Satya, country president of Applied Materials India, said in a statement that the Centre will “play a critical role in bringing the much-required synergies between engineers, academia and suppliers.”

“This is a big milestone in India’s roadmap and growth as a semiconductor nation. In the last 18 months, after the announcement of the semiconductor vision by PM Narendra Modi and the planned investment of ₹76,000 crore to catalyze and build India’s semiconductor ecosystem, much progress has been made,” said union minister of state for electronics and IT Rajeev Chandrasekhar, noting that rapid progress was made in a short period of time.

“This is just a beginning — there is more to come, as India rapidly grows as a significant and trusted partner to global electronics and semiconductor value and supply chains,” Chandrashekhar added.

Sanjay Mehrotra, president and chief executive of Micron, said, “Our new assembly and test location in India will enable Micron to expand our global manufacturing base and better serve our customers in India and around the world.”

Railways, IT and telecom minister Ashwini Vaishnaw said that Micron’s investment “will fundamentally transform India’s semiconductor landscape and generate tens of thousands of high-tech and construction jobs.”

Micron is the second-largest DRAM maker in the world as of December last year, with a 28.1% market share, according to market researcher Trendforce. As of the September quarter, Statista reported Micron as the fourth largest global Nand flash manufacturer, with a market share of 12.3%. Samsung remains the top maker of both DRAM and Nand flash modules.

Industry leaders and stakeholders welcomed the semiconductor facilities, stating they would help develop a domestic component supply chain for the semiconductor industry.

Vivek Tyagi, a semiconductor industry veteran and advisor to the board of the industry body, India Electronics and Semiconductor Association (IESA), said: “The first semiconductor testing and packaging facility will boost India’s overall supply chain for chipmakers in the long run, as Micron’s global supply vendors may also come to India in the long run. The facility will also help boost and create a number of indirect jobs alongside direct employment.”

Sanjay Gupta, chairperson of IESA, said that the new announcements showcase India’s ability to attract “high-value investments and fostering technological advancements… strengthening India’s position as a hub for semiconductor manufacturing, and provide a platform for collaboration, knowledge sharing and technology transfer.”

Micron pipped other applicants of the semiconductor PLI scheme, notably a joint venture between domestic firm Vedanta and Taiwanese contract manufacturer Foxconn. On 12 January, Mint reported that the Vedanta-Foxconn JV led other applicants to become the likely first entity to begin setting up its facility. On 19 April, Akarsh Hebbar, managing director of the venture, said that the company identified land in Gujarat for its intended facility and has signed memorandums of understanding with companies in Japan and South Korea to create a semiconductor component ecosystem.

David Reed, chief executive of the venture, said at the time that the venture expects to generate revenue from FY27. However, it remains unclear at the moment as to how its plans will proceed. Reports claimed that the venture’s production plan is stuck due to issues with supply chain partners.

Updated: 22 Jun 2023, 11:35 PM IST