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India woos Intel and TSMC to set up local semiconductor plants

India is in talks with global chipmakers Intel Corp., GlobalFoundries Inc. and Taiwan Semiconductor Manufacturing Co. about setting up local operations, part of efforts to center more high-tech manufacturing in the country.

Prime Minister Narendra Modi’s government late last year unveiled a $10 billion incentives plan, offering to cover as much as half of a project’s cost, to lure display and semiconductor fabricators to set up base in India. The country has set itself the ambitious goal of emulating neighboring China and becoming the electronics factory of the world.

“Most of the pitches to these big companies, I’m making myself,” Rajeev Chandrasekhar, a former Intel engineer and current minister of state for technology and entrepreneurship, told Bloomberg News in an interview on Monday. “We’re meeting the CEOs, talking to them, making presentations.”

Chandrasekhar and India face an uphill climb in making their case, as companies like TSMC and Samsung Electronics Co. pour tens of billions of dollars into expanding chip capacity every year and impose high demands on any locality in terms of logistics, water and energy supply. Still, both have shown themselves receptive to the entreaties of foreign suitors and are currently building new fabs in the U.S. after agreeing terms with local governments.

India Gets $20.5 Billion in Investment Proposals for Chip Production
In India, a venture between billionaire Anil Agarwal’s Vedanta Group and Foxconn Technology Group has shown interest in setting up semiconductor foundries within the country, however Intel and TSMC have yet to offer any commitments. Challenges such as power outages and wobbly infrastructure remain. Indian states are, however, aggressively competing to attract semiconductor investment, Chandrasekhar said.

“They are all open to sitting down and negotiating what other incentives, apart from land, they can offer investors. It is a keenly contested, keenly sought-after investment by states,” the minister said.

To attract smartphone assemblers, the Indian government has imposed import taxes on devices produced elsewhere and offered financial incentives for local manufacturing. The effort has been successful, aided by India’s large and growing smartphone user base, and has turned India into the world’s second-biggest smartphone maker. Companies including Samsung, Xiaomi Corp. and Apple Inc.’s Taiwanese suppliers Hon Hai Precision Industry Co., Wistron Corp. and Pegatron Corp. are all making devices locally.

New Delhi now wants to replicate that success in critical components such as silicon chips.

Biden Needs More Than $52 Billion to Counter China in Chips
India’s semiconductor manufacturing plans come at a time when leading economies are increasingly putting resources into securing their domestic chip production. China has set out a vision for semiconductor sovereignty, the Biden administration has a $52 billion plan to reclaim U.S. leadership in chip development and Japan is setting aside billions to attract the likes of TSMC. Trade tensions between Beijing and Washington along with Covid-related lockdowns have disrupted global supply chains and pushed companies to diversify outside of traditional tech manufacturing hubs like China and Taiwan.

Intel Chief Executive Officer Pat Gelsinger met with India’s prime minister earlier this month and a delegation led by U.S. Semiconductor Industry Association CEO John Neuffer also visited the country.

“Everybody has an interest, it’s a question of their plan,” Chandrasekhar said ahead of a three-day semiconductor conference in the southern tech hub of Bangalore. The event, oraganised by the federal government to court global semiconductor firms, begins on Friday. Bloomberg

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