American Technology Companies Announce Investments in Chip Manufacturing in India
The fab in India is designed to ensure the stability of critical semiconductor capacity and hence enhance U.S. national security.
WASHINGTON, June 28, 2023 – American chip manufacturer Micron Technology announced Thursday plans to invest up to $825 million in building its first chip assembly and test facility in Gujarat, India, which is intended to reduce America’s reliance on China for semiconductors.
The total investment for the facility, with support from the Indian central government and the state of Gujarat, is expected to reach $2.75 billion.
The United States holds just 12 percent of the semiconductor market share globally, and the announcement is intended to partly remedy that. Semiconductors are required for several advanced industries, including electronics, telecommunications, and automotive.
The ongoing worldwide shortage of semiconductors has also caused disruptions in supply chains impacting industries on a global scale. The fab in India is designed to ensure the stability of critical industries and enhance U.S. national security.
The partnership between India and the U.S. in the semiconductor sector is viewed as a means to counter China’s dominance in cutting-edge technologies. The U.S.-India memorandum of understanding on establishing a semiconductor supply chain, signed in March, seeks to enhance collaboration and diversify the supply chain. This partnership aligns with the U.S. strategy of strengthening connections with Asian allies.
Experts see the signing of the memorandum as an opportunity for both nations to reduce global dependency on China.
“The MoU seeks to establish a collaborative mechanism for the semiconductor supply chain resiliency and diversification in view of the US CHIPS and Science Act and India Semiconductor Mission (ISM),” said Charlie Dai, vice president, and research director at research firm Forrester.
The Quad Alliance, comprising India, the U.S., Japan, and Australia, has collaborated to secure supply chains in semiconductors and 5G telecom technologies. By becoming a part of the global semiconductor supply chain, India aims to achieve a balanced regional distribution of chip manufacturing share and eat into China’s share of the market – becoming America’s primary supplier of semiconductors for the time being.
The new facility in Gujarat will focus on the production of ball grid array (BGA) integrated circuit packages, memory modules, and solid-state drives. Micron aims to commence construction in 2023, with the first phase becoming operational in late 2024. The project’s second phase is planned for the latter half of the decade, creating up to 5,000 new jobs for the company both in America and India.
Alongside the investment from Micron, semiconductor toolmaker Applied Materials will invest $400 million over four years in a new engineering center in India, the company said on Thursday. Lam Research also pledged to train 60,000 Indian engineers through its Semiverse Solution virtual fabrication platform, thus increasing the labor pool as well.
“Lam’s Semiverse Solutions portfolio is a game-changer that provides a foundation to create a virtual semiconductor innovation universe,” said corporate vice president David Fried in a press release. “As the semiconductor ecosystem races to scale to address the criticality of chips, the virtual-physical fabrication world made possible with Semiverse Solutions opens the door for exciting new opportunities for collaboration, workforce development and advanced technology breakthroughs.”
