With the rising significance of semiconductor chips in an era of connected vehicles and devices, Tamil Nadu – considered the Detroit of India, is close to announcing big-ticket investments in the state.
Dr TRB Rajaa, the Minister of Industries of Tamil Nadu told Autocar, “‘We are extremely interested in bringing semiconductor industries to the state, expect big-ticket announcements in a year.”
The state government has set up a separate team that is looking at investors in the fab chip making facility, informed the minister. “We are in advanced talks with a few companies, and we should be able to make big announcements in a year or year and half,” assured Rajaa.
The state which has an ambition of becoming the EV capital of India, knows that the quantum of chips in electric vehicles is significantly higher and a local production of chips will get a long way in attracting capital for manufacturing of EVs.
The government of India had come out with a Production Linked Incentive scheme or PLI for semiconductors and display FAB ecosystem in December 2021 with a total outlay of over Rs 76,000 crore. This was tweaked in September 2022 to attract global investors with higher incentives.
Tamil Nadu is scouting for investments at a time when Foxconn has just withdrawn from a US$ 19.5 billion semiconductor joint venture with Vedanta. Foxconn has said that it plans to apply for incentives that India is offering under its semiconductor manufacturing policy. However, a large ticket investment from the likes of Foxconn is what Tamil Nadu state is vying for.
Post Covid, global multinational corporations have set their eyes on India as part of de-risking their supply chain and creating a China-plus alternative in case of any future disruptions.
Well aware that fab making is a water-intensive activity, Dr Rajaa assured that water will not be an issue for the investor and that the state will ensure adequate supply for facilitating smooth operation.
Semiconductors are a crucial part of the automotive business, the disruptions of which were felt during the pandemic. The industry incurred a production loss of about a couple of billion dollars annually in India since covid.
The semiconductor supplies mainly came from Taiwan and South Korea, and the pandemic exacerbated this issue, causing a demand-supply imbalance and disrupting supply chains. Post the pandemic, countries are rushing to make their own semiconductor chips to become self-sufficient.
Recently, Prime Minister Narendra Modi’s visit to the US resulted in announcements by players like Micron, Applied Materials and Lam Research, which are a “significant and meaningful milestone” in the expansion of the semiconductor ecosystem in the country,” Union Minister of State for Electronics and Information Technology Rajeev Chandrasekhar said.