India could see at least three more semiconductor fabrication units coming up in the next few months with cumulative investments to the tune of USD 8-12 billion, Union Minister for Electronics and Information Technology Ashwini Vaishnaw said on Tuesday.

India is working hard to get big semiconductor companies to build chip plants in the country with its $10 billion semiconductor program. Global semiconductor giants are considering making factories in India driven by the need to diversify supply chains beyond China and the big demand for tech talents in India.

According to Deccan Herald’s report. At the unveiling of AMD’s global design center in Bengaluru on November 28th, Ashwini Vaishnaw, Union Cabinet Minister for Railways, Telecommunications, Electronics and Information Technology of India, briefed journalists on ongoing negotiations with several local governments to determine precise locations in the following months.

AMD’s global design center plans to host around 3,000 AMD engineers in the coming years, focused on the design and development of semiconductor technology including 3D stacking, artificial intelligence, machine learning, and more. Vaishnaw pointed out that AMD setting up its biggest design center is strong evidence of how much global companies trust India. Besides, Vaishnaw highlighted the achievement of Micron’s semiconductor plant project, which was revealed in June and started construction in September. He said the success of Micron’s initial facility in India has boosted confidence globally.

Apart from global giants’ investment in India, the minister also told about the Semiconductor Lab (SCL) progress in Mohali, mentioned significant headway in the Expression of Interest (EoI) process. He anticipates finalizing matters within the next 5-6 months. The lab is planned to serve as both a research and semi-commercial facility.

The Indian government asserts that a comprehensive microprocessor chip manufacturing initiative is on the horizon in the country. Anil Agarwal, Chairman of Vedanta, anticipates the launch of “Vedanta chips made in India” by 2025, reported by icbank on weixin.

The government envisions establishing a “semiconductor city” in Dholera, Gujarat, covering an area equivalent to Singapore, with Prime Minister Modi expressing confidence in attracting both domestic and international giants to set up manufacturing plants despite the remote location.

The tech hub in Bangalore has played a pivotal role in India’s ascent as a global participant in the semiconductor network, primarily through chip design. Over the past two years, substantial government subsidies have transformed India into a hub for electronic product manufacturing.

India’s Challenges abound in the Actual Chips Manufacture

Despite initiatives like the “production-linked incentive measures” encouraging mobile assembly in India since 2020, chip manufacturing remains a formidable task.

Presently, nearly all cutting-edge chips are produced in Taiwan, with China’s chip investments surpassing those of India. Vedanta Group’s Agarwal plans to kickstart chip manufacturing within two and a half years, extending invitations to global chip manufacturing experts.

While today’s cutting-edge chips are predominantly manufactured in Taiwan, TSMC has even established a fab in Arizona with the assistance of the U.S. “Chip Act.”

India lacks a historical presence in chip manufacturing and faces a shortage of highly skilled engineers and equipment. Nevertheless, the government aims to achieve what companies like TSMC took decades to accomplish through substantial spending and capital investment promotion. However, China’s significant investments in domestic chip manufacturers, following the U.S. ban tightening China’s semiconductor development last October, far exceed India’s investments in local companies.

With the goal of establishing India’s inaugural semiconductor foundry, Mr. Agarwal of Vedanta Group aims to commence chip manufacturing within two and a half years, extending invitations to international talents like David Reed and Texas Instruments.

Agarwal aspires to attract around 300 foreign experts from East Asia and Europe to Gujarat. The manufacturing of microchips also necessitates a significant amount of customized infrastructure, with Vrishno, the responsible official, indicating that India’s largest chemical plant near Dholera can produce the specialized gases and liquids required for any chip factory’s operation.
(Image: AMD India)

TrendForce’s latest investigations indicate that China has recently announced two additional investments funded via phase two of the CICF (China Integrated Circuit Industry Investment Fund, better known as the “Big Fund”). The first of these investments was announced on June 8, 2021 and totaled CN¥1.65 billion, which has been used to establish a joint venture called Runxi Microelectronics, co-funded with CR Micro and the Xiyong Micro-Electronics Industrial Park.

Runxi will operate a semiconductor fab specializing in 12-inch wafer fabrication, with a production capacity of 30K/M (that is, 30,000 wafer starts per month). The second investment, announced on July 2, 2021, will total about CN¥2.5 billion and be put towards AMEC’s efforts to raise capital for establishing an industrial center, a headquarter located in the Shanghai Lin-Gang Special Area, and an R&D headquarter.

Now that the Big Fund Phase 2 has invested in semiconductor equipment for the first time, more equipment suppliers are expected to receive investment capital from Big Fund Phase 2 going forward

Established in October 2019, Phase 2 of the Big Fund consists of CN¥204.15 billion in capital, some of which was subsequently invested into 12 companies across the IC design, IC fabrication, package testing, and equipment sectors, as of July 5, 2021. In terms of funding allocation, IC fabrication take the lion’s share with 78.2% of the aforementioned investment, followed by IC design at 11.6%, equipment at 7.7%, and package testing at 2.6%. To date, about CN¥36.6 billion of the Big Fund Phase 2 has been invested.

Investment in AMEC marks the first time that the Big Fund Phase 2 has purchased shares in domestic suppliers of semiconductor fabrication equipment. As fabrication equipment is the key determinant of whether China can achieve its goal of semiconductor independence, suppliers that previously received Phase 1 funding (including Naura, ACM Research, Piotech, Sky Technology Development, and Shanghai Wanye Enterprises), as well as those that have yet to receive investment from the Big Fund (including SMEE and Hwatsing), are likely to receive Phase 2 funding for their expansion projects going forward.

China’s Big Fund provides the domestic semiconductor industry considerable leverage against US sanctions as AMEC receives financing unaffected by US blacklist

As a major supplier of semiconductor etching equipment in domestic China, AMEC specializes in substrate etching technologies. The company provides products which are used for 8-inch/12-inch wafer fabrication and are compatible with 65nm-5nm process technologies. In addition, AMEC has also been actively developing CVD (chemical vapor deposition) equipment, making it an indispensable part of the Chinese semiconductor supply chain.

AMEC effectively had its overseas financing sources cut off after being blacklisted by the US Department of Defense in January 2021. Now that the Big Fund Phase 2 has infused AMEC with CN¥8.207 billion of investment capital, the company is no longer threatened by its inclusion on the economic blacklist. Hence, the substantial Big Fund Phase 2 has also become an important instrument in China’s fight against US sanctions amidst a persistent trade war currently taking place between the two countries.

（Cover image source: Unsplash）