India Announces Incentives, Seeks Semiconductor Investment


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India Announces Incentives, Seeks Semiconductor Investment

The India cabinet on February 22 approved incentives to attract foreign investment to the semiconductor sector, including manufacturers of semiconductors, display units, storage devices, solar cells, and other micro and nanotechnology products, according to Rueters India.

The government will bear 20 percent of capital expenditures in the first 10 years if a unit is located within Special Economic Zones (SEZs) and 25 percent in case of other units. The minimum investment was set at 25 billion rupees ($566 million) for semiconductor manufacturers and 10 billion rupees for other micro- and nanotechnology makers. India Semiconductor Association (ISA) President Poornima Shenoy termed it an “extremely positive” policy.


India has enormous appeal for different parts of the semiconductor value chain. Many semiconductor and systems companies have established their own design centers in India and semiconductor manufacturing would gain considerable benefits if they could locate manufacturing in the same country as their design operations.

India is already a major contributor to the global technology market. According to Frost & Sullivan, semiconductor and embedded design revenues are expected to grow from $3.2 billion in 2005 to $43 billion by 2015. The India semiconductor market is expected to grow from $2.82 billion in 2005 to $ 36.3 billion in 2015. Electronics manufacturing is estimated to reach $155 billion in 2015, creating a $15.5 billion semiconductor market opportunity.

SEMI has several member companies with operations (mostly design) in India and many others are active in the India market through partners and representatives. SEMI members who are members of ISA include Applied Materials, Aquest Systems, Aviza, Brooks Software, KLA-Tencor, Novellus Systems, Synopsys, and Satyam Computer Services.

Major project initiatives include SemIndia, Nano Tech Silicon and HSMC. SemIndia announced a $3 billion "Fab City" project last year, including a $100 million ATMP facility. Nano Tech Silicon has land in Fab City and HSMC (Hindustan Semiconductor Manufacturing Inc.) reportedly announce their plans in a few weeks that may include a first phase for 200 mm wafer size and second phase of 300 mm wafers. In addition the Indian Institute of Science is planning a MEMS proof-of-concept minifab to work on fabrication and materials research.

Other important players in India include Tessolve, SPEL and Semiconductor Complex Ltd.

In support of other emerging markets such as China, SEMI has advocated government policies, conducted government education efforts, organized trade missions, and facilitated financial and industry collaborations to foster market development. SEMI is currently working closely with ISA and has supported two government delegations in the past year. SEMI has a regular presence in the subcontinent at industry and member meetings.

By cultivating the semiconductor manufacturing industry, India has the potential to become to become a significant new market for SEMI member companies.

While many observers are skeptical of near term-contribution to semiconductor and display manufacturing, India’s announcement may yet be the first rumblings of a sleeping giant.

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SEMI has reports which list all front-end fabs in India and any future fabs in their 'Fab Capacity Report' and 'FabFutures' reports. These reports document and forecast for the next 6 quarters, capacities, geometries, wafer sizes, product type, capital spending and more by fab. More information can be found here.

More information on the India Semiconductor Association can be found at www.isaonline.org.