In a significant development, Israel-based semiconductor manufacturing firm, Tower Semiconductor, has reignited its interest in India’s chip incentive program, deliberating the establishment of a cutting-edge semiconductor fabrication plant within the nation. This comes after Intel’s $5.4 billion plan to acquire Tower Semiconductor was terminated due to regulatory complications in August.
Should Tower Semiconductor’s proposal come to fruition, it would mark a pivotal moment as the first semiconductor company boasting a profound heritage in chip fabrication to engage with India’s monumental $10 billion chip manufacturing initiative, substantially enhancing New Delhi’s aspirations within the semiconductor manufacturing realm.
Upon inquiry regarding Tower Semiconductor’s renewed commitment to India’s chip incentive initiative, the Minister of State for Electronics and IT, Rajeev Chandrasekhar, conveyed that the government has extended an invitation to the company’s CEO, Russel C. Ellwanger, to explore potential collaborations within the semiconductor sector. Chandrasekhar, having recently met with Ellwanger in the company of Naor Gilon, Israel’s Ambassador to India, refrained from offering specific insights on whether Tower Semiconductor would indeed submit an application under the chip manufacturing program.
Tower Semiconductor, recognized predominantly for its legacy technology responsible for crafting analog chips used in tasks such as signal amplification and power management in an array of electronic devices, has encountered a temporary hiatus in its investment plans in India due to the aforementioned acquisition.
However, in the wake of the deal’s disintegration, the company has once again exhibited a keen interest in investing within the framework of the chip incentive program. It is imperative to acknowledge that geopolitical sensitivities surrounding Israel’s relationship with Palestine may pose certain complexities that the company must navigate in the process.
Despite India’s success in luring notable names like Micron Technology to establish a chip packaging facility within its borders, the country is yet to witness a feasible application for a state-of-the-art semiconductor fabrication plant. While securing Micron’s substantial investment commitment of $825 million for its packaging facility represents a significant accomplishment in India’s chip ambitions, the establishment of a chip foundry stands as a milestone that could garner further investments in the semiconductor domain.
Previously, the international consortium ISMC, with backing from Abu Dhabi-based Next Orbit and Tower Semiconductor, had urged the Indian government not to consider their proposal due to the pending merger. The consortium had initially pledged to set up a $3 billion semiconductor fabrication plant in Karnataka.
The merger between Intel and Tower Semiconductor, announced in February 2022, received approval following antitrust reviews in the United States and several other jurisdictions. However, it encountered a protracted delay in China, where regulators scrutinize mergers involving companies that generate a certain threshold of revenue in the nation.
A collaboration between Foxconn, renowned for its role in manufacturing iPhones, and Vedanta to establish a colossal $19.5 billion chip manufacturing facility came to an abrupt halt earlier this year. Foxconn publicly declared its withdrawal from the joint venture with Vedanta. While government sources suggest that the two entities might apply separately, no tangible progress has been observed in this regard thus far.
An additional semiconductor fabrication proposal, put forth by Singapore-based IGSS Venture, was assessed by the government’s advisory committee and subsequently found to fall short of the desired standards, relegating it to a state of inactivity.
The possibility of Tower Semiconductor’s renewed engagement in India’s chip manufacturing sector holds considerable promise. If realized, this endeavor could potentially elevate India’s status in the global semiconductor industry.