Cabinet Approves Establishment of India’s Fifth Semiconductor Unit

The government launched the India Semiconductor Mission and the display manufacturing ecosystem with an outlay of ₹76,000 crore in December 2021

The Union Cabinet on Monday approved a proposal by Kaynes Semicon to set up a semiconductor unit in Sanand, Gujarat, with an investment of ₹3,307 crore (US$394.15 million), electronics and information technology minister Ashwini Vaishnaw said.

This is the fifth semiconductor unit to be approved under the India Semiconductor Mission (ISM), the second to be set up in Sanand. It brings the total investment to ₹1,52,307 crore (US$18.15 billion).

The government launched the ISM and the display manufacturing ecosystem with an outlay of ₹76,000 crore in December 2021. On Monday, Vaishnaw said semiconductor industry is a “foundational industry” for India’s domestic manufacturing goals. “This [ISM] is a long programme so there will be an increased outlay for sure and we will come back with the details of the programme as and when they are finalised,” he said.

The Kaynes Semicon ATMP (assembly, testing, marking and packaging) unit will be able to produce about 6 million chips a day which will be used in industries, automobile sector, electric vehicles, consumer electronics, telecom equipment, and mobile phones.

Raghu Panicker, the CEO of Kaynes Semicon, said that the new unit will be set up on a 47-50 acre facility in Sanand. “In the last three months, structural tests, soil testing, and levelling were done. Tomorrow, or day after, we will have the approval letter and then we will begin digging. In six to eight months, the clean room will be constructed.”

The purchase order for equipment will be released on Wednesday, Panicker said.

“By March 31, 2025, the first packaged chip for a paying customer will be out. We will book some revenue in this financial year, but the main revenue will come in next financial year,” he said.

Kaynes Semicon is a wholly owned subsidiary of Karnataka-based electronics manufacturer Kaynes Technology. Last week, Panicker had announced that Singapore-based Lightspeed Photonics had become Kaynes Semicon’s first OSAT (outsourced semiconductor assembly and test) customer. He said that the company had secured two more customers, one from the US and another from Taiwan, and the announcement will be made in the coming weeks.

For this new ATMP unit, Kaynes Semicon has three technology partners — Globetronics (Malaysia), Aptos Technology (subsidiary of Taiwan mask Corporation), and AOI (Japan). According to Kaynes’s February 2024 update filed with the National Stock Exchange, Kaynes Semicon will pay Aptos up to $5.5 million to receive personnel technical training and know-how licensing to establish packaging and testing capabilities in India. According to a March 2024 update filed with the NSE, ISO, a wholly owned subsidiary of Globetronics, will help Kaynes Semicon set up a centre and supply chain for the development of OSAT business in India for which Kaynes will pay ISO up to US$7.5 million.

“We have already hired 35 key people and made offers to 15 expats from Philippines, Thailand, Malaysia and Japan. We have also signed MoUs with universities to get engineers and diploma holders. Before March 31, 2025, 500 people will be employed at this unit,” Panicker said.

This facility was initially to be set up in Telangana and the company held a groundbreaking ceremony in Telangana in October 2023.

Vaishnaw also gave updates on the other four semiconductor units in India. American company Micron’s ATMP facility in Gujarat was approved in June 2023. Micron invested $2.75 billion into the plant and construction began in September 2023. “The Micron plant is getting constructed at a rapid pace. By the middle of next year, the first Made-in-India chip will be produced from this plant,” Vaishnaw said. In February 2024, while announcing the approvals for the other three units, Vaishnaw had said that the first chip from the Micron plant would roll out in December 2024.

In February, the Cabinet had approved three semiconductor units. First was India’s first semiconductor fab unit in Dholera (Gujarat) set up by Tata Electronics Private Limited (TEPL) in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC). Vaishnaw said that the project is progressing well and is currently being designed. “That is a very, very complex and very ambitious project,” he said.

The other two were ATMP units — by Tata Semiconductor Assembly and Test Private Limited (TSAT) in Morigaon (Assam) and CG Power (in partnership with Japan’s Renesas Electronics Corporation and Thailand’s Stars Microelectronics) in Sanand (Gujarat). “The construction of Tata’s Assam plant started recently while CG Power’s Sanand plant has been designed and construction will soon start,” Vaishnaw said on Monday.