The association represents 250 global companies across fabrication, assembly, packaging, semiconductor equipment and materials.
The Indian Electronics and Semiconductor Association (IESA), which represents companies like Micron, Applied Materials, Intel, Western Digital, etc, is likely to approach the government urging to bring the ancillary semiconductor industry also under the incentive scheme. Sanjay Gupta, chairperson (IESA) told FE that incentives for ancillary industry comprising semiconductor assembly and manufacturing players are crucial to encourage the supply chain partners to establish their co-location facilities in the country.
The association represents 250 global companies across fabrication, assembly, packaging, semiconductor equipment and materials.
“Anything that is part of the semiconductor ecosystem, even if it is seeking incentives for ancillary industries, we would pitch it to the government, based on our discussions with our partner companies,” Gupta said, adding that the job of IESA is to enable and it works with both the central and state governments on policy formation.
Under the Rs 76,000-crore Semicon India Programme, a fiscal incentive of 50% of the project cost is being given to the companies for setting up semiconductor fabrication units of any node (including mature nodes). On top of that, some states such as Gujarat and Odisha are offering support of 20% and 25%, respectively, to the companies to set up their facilities there.
However, for supply chain companies whose support will be required by companies like Micron to assemble and package their chips in India, the present policy does not have any incentives. Last month, supply chain partners of Micron such as South Korea-based Simmtech, Japan-based Disco Corp, Singapore’s Kulicke & Soffa and French industrial gas company, Air Liquide, InoxAir etc, also urged the government to also have incentives for them.
“The government will not get into it (incentives for ancillary companies) but certainly it could be the case that some state governments say that we will add on and create incentives,” Rajeev Chandrasekhar, minister of state for electronics and information technology had said recently, adding that for supply chain and ancillary companies, state governments can give land, water, electricity type of support to attract them.
Jeffery Chun, chief customer officer of Simmtech said, “We are now evaluating and preparing for another co-location investment together with Micron (in India). The key consideration would be whether we can continue and receive the equal and same level of support from the government”. Simmtech develops products such as module printed circuit boards (PCBs) for semiconductors’ memory expansion.
Raja Vinay Singh, head of business development, large industries at Air Liquide, during the SemiconIndia 2023 event had said, “Utility players like Air Liquide should be seen as part of the ecosystem and the capex subsidy benefits should be extended for the full support of supply for us as well”.
When asked if absence of incentives for semiconductor allied industry will reduce the pace of chip projects in India, Gupta said, “this has always been an ideal desire for incentives but it will not stop the train because the bigger problem was to get these technology companies decide that they want to share their technologies outside their core base”.
On the government’s plan to expand the semiconductor design-linked scheme (DLI) to bigger companies and not restricting the scheme only to startups, Gupta said, “if the IP (intellectual property) of designs belong to India, then 100% they should allow big companies. But if you have hungry startups who are ready to make a killing vs a big multinational company, the preference should be given to startups”.
As the government has signed partnership agreements with countries like the USA and Japan, nearly 14-18 supply chain companies which involve gasses, chemicals, etc, have joined IESA. Besides working with its members, the association is also collaborating with different state governments to launch their own semiconductor policies.
“We will be the go-to entity for the entire semiconductor ecosystem because of our strength. In all our chapters based on the expertise of our standard members we are ready for any task from the government,” Gupta said, adding that India will be amongst the top three manufacturers of semiconductor in the next 10 years. “One thing is clear no matter when we start a fabrication, India remains the talent base for the world. So whether it is Lam Research, whether it is Applied Materials, whether it is even design companies, the majority of the worldwide R&D talent come from India. So, that is the strength,” Gupta said.
“All these companies, chemical companies, gasses companies, lithography companies, etc, everything will be there in India,” Gupta added.
The country’s semiconductor market is expected to reach $64 billion by 2026 largely led by both domestic and export markets with significant demand from the consumer electronics, telecom, IT hardware, and industrial sectors, according to a joint report by Counterpoint Research and the India Electronics & Semiconductor Association (IESA) in association with Invest India.
Since Micron investment announcements for assembly and packaging unit in the country, the government has received at least 4-5 ATMP (assembly, testing, marking, and packaging) projects from companies, compound semiconductor proposals, as well as from companies in memory business.
https://www.financialexpress.com/industry/semiconductor-firms-seek-incentives-for-supply-chain-partners/3215214/
