Govt Readies RFP Seeking Proposals from Companies to Set Up Semiconductor Plants

SemiconductorThe government will soon put out a request for proposal (RFP) document seeking formal applications from companies to set up semiconductor plants, senior officials said.

The officials said several companies showed interest earlier this year to set up such fabs (fabrication units) and that the government would decide on the quantum of subsidy only after it receives specific proposals.

“We have to take final approvals for issuing the RFP… It should happen soon. How much support can be given to the companies will be decided after we receive the applications and after discussing with stakeholders on their support requirements,” a senior official directly involved in the matter said.

Setting up fabs is expensive and the subsidy is huge, so the government will be “careful” before giving approvals, the official added. “We have to see whether the party is genuine, how much money they will be bringing, etc.”

After the government issued an expression of interest earlier this year, nearly 20 companies are believed to have shown willingness to invest in the sector.

Tata Sons chairman N Chandrasekharan also recently spoke about the salt-to-software conglomerate’s plans to enter the semiconductor space, to reduce dependence on Chinese imports.

A global shortage of chips – which has crippled several industries such as automobiles and electronics – due to the Covid-19 pandemic, has spurred many companies to diversify operations to newer locations.

The Ministry of Electronics and IT (MeitY) has not divulged the quantum of incentive it would provide companies. However, the government is believed to set aside $1 billion for a fab, which requires a total investment commitment of $2 billion-$5 billion or more.

The government official said 5G, data centres and semiconductors were the next areas of focus for the government, which has been successful in attracting companies to set up mobile phone manufacturing plants through incentive schemes over the past few years.

The government is open to setting up both traditional fabs as well as new-age ones like the Gallium Nitride semiconductor fabs, which are relatively cheaper to build.

“We are open to both domains, both can come at the same time, depends on the interest that we get from the players,” the official said, adding that all top fab makers have shown a willingness to participate.

Last time round, the government had offered a capital expenditure subsidy of up to 40% to set up fabs, but none of the approved proposals took off.

The industry is therefore expecting a better deal this time, said Arun Mampazhy, an expert on semiconductor fab technology.

“India has been too slow in finalising the policy. Any further delay from India’s side may lead to losing one of the few interested foundries also. Big shots like TSMC or Samsung or Intel are likely to prefer already proven countries and so it is important for India not to lose offers it already has,” he added.


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