ISMC to invest Rs 22,900 cr in Karnataka on semiconductor fabrication plant

ISMC has sought 150 acres in Mysuru's Kochanahalli Industrial area. This will be one of India's first and largest semiconductor fabrication units under Centre's Semiconductor Mission

International semiconductor consortium ISMC will invest $3 billion (Rs 22,900 crore) in Karnataka state to set up a chip-making plant, the state government said on Sunday. The investment is for a 65 nm Analog Semiconductor Fabrication plant.

The ISMC has requested 150 acres of land in Mysuru’s Kochanahalli Industrial area. This will be one of India’s first and largest semiconductor fabrication units under the Central Government’s Indian Semiconductor Mission upon project approval by the Government of India. The project is expected to generate more than 1500 direct and 10,000 indirect employment opportunities and ancillary semiconductor ecosystem industry development in the area with significant multiplier effects.

Additional Chief Secretary in the department of IT, BT Dr E V Ramana Reddy and Director of ISMC Ajay Jalan signed a memorandum of understanding in the presence of Karnataka Chief Minister Basavaraj Bommai.

“This MoU (memorandum of understanding is a significant agreement amid the competition among various states to attract semiconductor fabs,” said Bommai, who met the ISMC team at his home office. “Karnataka understands that it’s not just the fiscal incentives that matter but the availability of a conducive eco-system and overall ease in operations are also important. We have one of the best infrastructures in the country and an abundant skilled talent pool,” said Bommai.

Tower Semiconductor, is the principal technology partner, with the project initially funded by Next Orbit Ventures Fund (NOVF). The consortium is one of the three applicants for the Central Government’s $10 billion incentive package for semiconductor manufacturing.

ISMC is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel's Tower Semiconductor. U.S. chip giant Intel Corp has announced plans to acquire Tower.

“As a state, we are not just trying to bring down the entry barriers for businesses but also make it easier to exit businesses, should it be so required,” said Bommai. “With robust policies, a committed team, best-in-class infrastructure, and an ever-increasing talent pool of workers, Karnataka is on its way to becoming a premier investment destination.”

State Minister for Higher Education Dr C N Ashwath Narayan said semiconductor production in Karnataka will provide further impetus to the economy of the state. “We are happy to support global firms to set up manufacturing facilities here,” said Narayan.

E V Ramana Reddy said the uptick in Indian investment in semiconductors coincides with the global demand for semiconductors amid a shortage expected to run through 2025.

“We have suggested an Electronics and Systems Design cluster in Mysuru as the investment destination for ISMC,” said Reddy.

The investment comes at a time when Prime Minister Narendra Modi recently urged the industry to make India a global hub for semiconductors, asserting that the government had “put the odds in your favour as far as possible through a supportive policy environment”.

The prime minister, in his inaugural address at the Semicon India-2022 conference in Bengaluru, said there was a collective aim to establish India as one of the key partners in global semiconductor supply chains.

India is also investing heavily in skilling and training young Indians for the needs of the 21st century. Modi said India has an exceptional semiconductor design talent pool which makes up to 20 per cent of the world's semiconductor design engineers. Almost all of the top 25 semiconductor design companies have their design or R&D centres in the country.

At the conference, it was also revealed that India has received investment proposals from five global Semicon majors to set up semiconductor fabs and display fabs locally in India. The proposals are for manufacturing the chips used in a wide array of products including consumer devices, automotive and personal electronics. The proposals received so far are to the tune of $20.5 billion in the greenfield segment of display and semiconductor chip manufacturing.