Micron announces $2.75bn chip testing project amid PM Modi's US visit

A day after initial reports, US chipmaker Micron on Thursday confirmed a $2.75 billion semiconductor testing and assembly facility — the first commercial one of its kind in India. The move marks the first approval under the Centre's $10 billion production-linked incentive (PLI) scheme, announced initially in December 2021.

Under its ambit, Micron will set-up assembly, testing and packaging facility of dynamic random access memory (DRAM) and Nand flash modules. The factory will be set-up in two phases — the first of which will include a 5 lakh square feet assembly facility in Sanand, Gujarat. Work on the factory will commence later this year, while the second phase of the project will commence in the second half of this decade.

Micron will invest $825 million in two phases. It will also be a benefactor of the PLI scheme, under which it will receive 50% of its total project cost as fiscal support from the Centre. Further, the Gujarat state government will offer Micron 20% of the total project cost as incentive to Micron, bringing the total investment in the facility to up to $2.75 billion.

The company further said that once completed, the facility will create "up to 5,000 new, direct Micron jobs, and 15,000 community jobs over the next several years."

On Tuesday, Reuters reported that Cabinet approval for Micron's chip testing facility was given ahead of Prime Minister Narendra Modi's ongoing trip to the US. It also said that government incentives will add up to $1.34 billion in Micron's testing and assembly facility.

"This is a big milestone in India’s roadmap and growth as a semiconductor nation. In the last 18 months, after the announcement of the semiconductor vision by PM Narendra Modi and the planned investment of ₹76,000 crore to catalyze and build India’s semiconductor ecosystem, much progress has been made. This is the progress that PM Modi’s vision and leadership has delivered, in a very short period. This is just a beginning — there is more to come, as India rapidly grows as a significant and trusted partner to global electronics and semiconductor value and supply chains," union minister of state for electronics and IT, Rajeev Chandrasekhar said.

Sanjay Mehrotra, president and chief executive of Micron, said, "Our new assembly and test location in India will enable Micron to expand our global manufacturing base and better serve our customers in India and around the world."

Micron is the second-largest DRAM maker in the world as of December last year with a 28.1% market share, according to market researcher Trendforce. As of the September quarter, Statista reported Micron as the fourth largest global Nand flash manufacturer, with a market share of 12.3. Samsung remains the top maker of both DRAM and Nand flash modules.

Industry leaders and stakeholders welcomed the announcement, stating that it will help develop a domestic component supply chain for the semiconductor industry.

Vivek Tyagi, a semiconductor industry veteran and advisor to the board of industry body, India Electronics and Semiconductor Association (Iesa) told Mint, "The first semiconductor testing and packaging facility will boost India's overall supply chain for chipmakers in the long run, as Micron's global supply vendors may also come to India in the long run. The facility will also help boost and create a number of indirect jobs, alongside direct employment."

Sanjay Gupta, chairperson of Iesa said that the project showcases India's ability to attract "high-value investments and fostering technological advancements... strengthening India's position as a hub for semiconductor manufacturing, and provide a platform for collaboration, knowledge sharing and technology transfer."

Micron pipped other applicants of the semiconductor PLI scheme, notably a joint venture between domestic firm Vedanta and Taiwanese contract manufacturer Foxconn. On 12 January, Mint reported that the Vedanta-Foxconn JV led other applicants to become the likely first entity to begin setting up its facility. On 19 April, Akarsh Hebbar, managing director of the venture, told Mint that the company has identified land in Gujarat for its intended facility, and has signed memorandums of understanding (MoU) with companies in Japan and South Korea to create a semiconductor component ecosystem.

David Reed, chief executive of the venture, said at the time that the venture expects to generate revenue from FY27. However, it remains unclear at the moment as to how its plans will proceed. Reports claimed that the venture's production plan is stuck due to issues with supply chain partners.