India’s Semiconductor Journey Gains Pace: Here Are Six Fabs And Testing Units Coming Up

On Thursday (5 September), the Maharashtra government greenlit a semiconductor manufacturing project. It's a joint venture between Israel's Tower Semiconductor and the Adani Group and will be set up in Panvel, Raigad district.

With an investment of Rs 83,947 crore, this ambitious project will commence with a production capacity of 40,000 wafers per month in Phase 1, scaling up to 80,000 wafers per month in Phase 2.

If realised, it will be India's second chip manufacturing facility and the sixth semiconductor plant involved in silicon chip production or testing.

New Delhi is accelerating its quest to become a global semiconductor powerhouse, with three units breaking ground this year and a fourth one recently approved — all under the India Semiconductor Mission (ISM).

These facilities include a chip fabrication unit in Dholera, Gujarat, and four assembly and testing plants — known in the industry as ATMP (assembly, testing, marking, and packaging) and OSAT (outsourced semiconductor assembly and testing).

Three of these units are rising in Sanand, Gujarat, and the other in Morigaon, Assam.

With a staggering total investment of Rs 1.50 lakh crore and a combined capacity of around 7 crore chips per day, these cutting-edge units are set to revolutionise India’s semiconductor landscape.

Here are the pivotal semiconductor facilities emerging across the country:

1. Micron's OSAT Facility, Sanand

American chipmaker Micron Technology is setting up an OSAT plant in Gujarat’s Sanand, with a total investment of $2.75 billion. Of the total outlay, 50 per cent of the fiscal support is from the central government, and 20 per cent is from the Gujarat government.

Approved as the first project under ISM in June 2023, Micron is setting the stage as the first semiconductor player to establish manufacturing in India.

The facility will focus on assembling and testing DRAM and NAND products, catering to both domestic and international markets.

With construction progressing swiftly, the first made-in-India chip is expected to debut by mid-next year.

2. Dholera: Nation's First Fab

Tata Electronics, in collaboration with Powerchip Semiconductor Manufacturing Corporation (PSMC) of Taiwan, is establishing a mega semiconductor fabrication facility (fab) at Dholera, Gujarat.

Prime Minister Narendra Modi laid the foundation stone for this project in March 2024.

As India’s first advanced chip manufacturing plant, the facility will boast a production capacity of 50,000 wafers per month and a significant investment of Rs 91,000 crore, with the central government contributing 50 per cent of the capital expenditure on a pari passu basis under the ISM.

The Dholera fab is set to deliver its first batch of semiconductors by December 2026, positioning India to address the growing global demand in automotive, computing, communications, and artificial intelligence sectors.

3. Morigaon: Nation’s First Indigenous Semiconductor Assembly And Testing Facility

Tata Electronics is establishing a greenfield semiconductor assembly and testing facility at Jagiroad in Morigaon, Assam, marking India’s first semiconductor unit in the North East.

With a significant investment of Rs 27,000 crore, this state-of-the-art facility is expected to create over 27,000 direct and indirect jobs.

The assembly and testing phase is a crucial segment of the semiconductor value chain, where wafers from fabs are assembled, packaged, and tested before integration into final products.

The Jagiroad facility will focus on three key platform technologies — wire bond, flip chip, and integrated systems packaging (ISP), with an impressive production capacity of 48 million chips per day.

Tata Electronics has made substantial investments in developing indigenous technologies for these platforms.

The first phase of this facility is anticipated to begin operations by mid-2025, facilitating direct shipment of semiconductor chips to end-users and original equipment manufacturers (OEMs) both within India and globally.

4. C G Power's Sanand OSAT

The Murugappa Group's C G Power has teamed up with Japan’s Renesas Electronics Corporation and Thailand’s Stars Microelectronics to establish a state-of-the-art OSAT facility in Sanand, Gujarat.

Spanning approximately 28 acres, this facility represents a substantial investment of Rs 7,600 crore over five years and is expected to create around 5,000 jobs.

The factory will manufacture a diverse array of products, from legacy packages to advanced solutions, serving industries such as automotive, consumer electronics, industrial applications, and 5G technology. It is designed to scale up production to 1.5 crore units per day.

With the groundwork already laid, C G Power’s Sanand plant aims to begin production within the next two and a half to three years.

5. Kaynes Semicon Plant, Gujarat

The Union Cabinet on 2 September approved a proposal by Kaynes Semicon, based in Mysuru, for an outsourced assembly and testing unit worth Rs 3,307 crore.

The company plans to establish its OSAT unit in Sanand, Gujarat, with a total capacity of 6.3 million chips per day.

This approval is part of ISM’s modified scheme for semiconductor fabs, which offers 50 per cent capital investment support.

As India seeks to position itself as a promising alternative to China amid tensions between Beijing and the West, the development of its semiconductor industry has become a top policy priority.

Recent approvals and the progress on four new semiconductor units indicate that New Delhi's ambitious programme to kick-start domestic chip manufacturing is gaining momentum after a sputtering start.

The growing momentum may explain the government's decision to boost its chip manufacturing incentive policy, raising the funding outlay for the second phase to $15 billion, an increase from the $10 billion allocated in the first phase.