Chasing the semicon dream: Trip to Taiwan to woo chip foundries

A power-packed delegation from India — of senior government officials, electronics-industry associations, and executives from semiconductor companies — is visiting Taiwan next week to explore collaboration in multiple areas, according to sources. 

This comes immediately after Semicon India 2025, where Prime Minister Narendra Modi pitched India as the next big destination for the industry worldwide. 

The engagements in Taipei, coinciding with Semicon Taiwan 2025 (a mega summit), are expected to revolve around the possibility of Taiwanese semiconductor chip foundries setting up units in India, it is learnt. 

Taiwan is the biggest hub of manufacturing chips, used in multiple industries across the world. 

Semiconductors are vital for modern electronics, ranging from computers to smartphones, and solar panels to medical equipment. The visit of the Indian delegation to Taiwan assumes greater relevance against the backdrop of the changing geopolitical dynamics. 

The delegation, a senior official said, may discuss opportunities with companies such as the Advanced Semiconductor Engineering group and United Microelectronics Corporation. 

As for Taiwan Semiconductor Manufacturing Company (TSMC), which is the world’s largest chip-making foundry, it is building new units in China, Taiwan, Japan, and the United States, an official said. Therefore, the company is unlikely to commit itself to an entirely new country (India) before the completion of those four units, he said. During the Taiwan trip, there could also be discussion with allied companies that provide raw materials to chip foundries to understand their requirements for setting up these units in India, the official said. Taiwanese firms have been among the first to sign joint-venture agreements with Indian outfits setting up chip-fabrication plants in India.

 

One of the most significant partnerships among them is the joint venture between the Tata group and Taiwan’s PSMC, which is collaborating to build India’s first chip-fabrication units in Dholera, Gujarat. 

Taiwan’s Foxconn, the world’s largest contract manufacturer, has partnered the HCL group to establish an OSAT (outsourced semiconductor assembly and test) unit in Jewar, Uttar Pradesh. 

The government-led delegation’s visit to Taiwan comes against the backdrop of the government finetuning the contours of the second phase of the India Semiconductor Mission (ISM). The outlay for ISM Phase 2, which has received in-principle approval from the finance ministry, is likely to be upwards of ₹1 trillion (approximately $15 billion), according to sources. 

Elaborating on the second phase of the ISM, an official at the Ministry of Electronics and Information Technology (Meity) said there would be two or three things different from the first phase. 

“We will bring in machinery manufacturers, gas and chemical suppliers, among others. We have one fab, but that is clearly not enough capacity, so the support for fab (semiconductor chip fabrication) will continue. As for ATMP (assembly, testing, marking and packaging) and OSAT units, we will have to see how to utilise the funds best and take a call on how much incentive they need,” the official said. 

India’s journey to establish a semiconductor chip-fabrication and packaging ecosystem from scratch began in December 2021 with the Union Cabinet’s approval of a ₹76,000 crore (approximately $10 billion) incentive package. 

The first version of the scheme had several complex parameters, including the type of semiconductor unit being established, the nature of the chips to be manufactured, and the kind of technology used. It also prescribed different incentives for semiconductor-manufacturing companies and a lower incentive rate for chip-assembly units. 

Subsequently, the government launched a revamped version under the ISM, which offered a flat 50 per cent central-government incentive for all semiconductor units, regardless of whether they were chip fabrication, an ATMP, or an OSAT unit.

Since then, India has approved 10 semiconductor units, including a chip-fabrication unit and a compound-semiconductor unit.  The remaining eight units are ATMP and OSAT plants, which are being set up in Sanand, Mohali, Bhubaneswar, Jewar, Guwahati, and near Tirupati.