Indian company to invest $1bn to build semiconductor manufacturing facility in Tamil Nadu

Tamil Nadu-based Indian semiconductor manufacturing company, Polymatech announced an investment of $1 billion to expand its chipset manufacturing and packaging facilities in the country. Nandam Eswara Rao, founding president of Polymatech, said that the first phase of its semiconductor chip manufacturing and packaging facility will have the capacity to produce 250 million chips per year. 

Rao added that the company has filed for a 25% subsidy on capital expenditure through the government’s production-linked incentive (PLI) scheme for semiconductor manufacturing, and has received “in-principle approval” for its first phase of investment. Under this phase, Polymatech has signed a memorandum of understanding (MoU) with the Tamil Nadu state government, and made an investment of $130 million to expand its facility in the state. 

Chipmakers around the world are believed to be in talks with the union government to build chip manufacturing, assembly, testing and packaging facilities in the country. In May this year, a government official who requested anonymity told Mint that multiple companies, including Taiwan Semiconductor Manufacturing Co (TSMC) — the world’s biggest chipmaker by volume — are in talks with various state governments to set-up semiconductor manufacturing facilities. 

The first chip manufacturing facility was tipped to be sanctioned by the end of 2022, the official added. 

On July 20, Rajeev Chandrasekhar, union minister of state for electronics and information technology (IT), told the Parliament that the Ministry of Electronics and IT (Meity) had received 23 applications for the semiconductor PLI scheme. Announced in December last year, the scheme offered incentives of up to ₹2.3 lakh crore, in a bid to attract firms engaged in semiconductor manufacturing, testing, packaging and design. 

Polymatech claimed that its semiconductor manufacturing and packaging facility will start producing chips within the next “couple of weeks”. 

Rao added that the company will look to “indigenise” various components required in semiconductor chip manufacturing. “We are now importing silver paste (a component required in chip manufacturing), and high-temperature co-fired ceramic substrates. We are importing them today, but will produce them in-house eventually,” he said.