India’s cabinet has given its approval to Micron Technology, a US chipmaker, for its $2.7 billion (approximately Rs. 22,159 crores) proposal to establish a new semiconductor testing and packaging unit. A senior government official revealed this information on Tuesday, just before Prime Minister Narendra Modi’s visit to the United States.
The Indian government has agreed to provide production-linked incentives amounting to Rs. 110 billion ($1.34 billion) for the construction of the plant, which is scheduled to be built in Gujarat, Prime Minister Modi’s home state. The official, who preferred to remain anonymous until the official announcement during Modi’s visit, confirmed that the cabinet’s approval was necessary due to the substantial size of the incentive package.
While reports regarding Micron’s plan were previously published, the recent development of cabinet approval had not been disclosed until now.
Requests for comment made to Micron and the Indian government, including its technology ministry, were met with no response from their respective spokespersons.
As part of his ongoing visit, starting on Tuesday, Prime Minister Modi will hold meetings with the chief executives of several prominent American companies, such as FedEx and MasterCard. Additionally, he will be honored with a state dinner at the White House on June 22.
Meanwhile, the plans put forth by Micron Technology align with the efforts of the White House, which is urging US chip companies to consider investing in India. Discussions are underway regarding potential additional investments, according to officials from the US administration.
The Biden administration aims to encourage domestic companies to reduce the risks associated with conducting business in China while fostering stronger integration between the US economy and that of India, the world’s largest democracy, according to a US official.
Regarding US firms considering investments in India, a senior official from the Biden administration expressed encouragement over the growing interest.
In May, China declared that Micron had failed a security review and prohibited operators of critical domestic infrastructure from purchasing products from the United States’ leading memory chipmaker. This move provoked discontent within the Biden administration. The US Commerce Department declined to comment on the matter.
An industry source familiar with Micron’s approved plans stated that the Assembly Testing Marking and Packaging unit would be constructed in the city of Sanand. These facilities specialize in testing and packaging semiconductor chips, but they do not engage in chip manufacturing. The Micron plant in India could handle the procurement and packaging of chips for clients or provide testing services for other companies before their chips are shipped.
The source further noted that while Micron’s investment supports Prime Minister Modi’s goal of establishing India as a semiconductor hub, true success would require actual chip manufacturing capabilities.
Sources recently reported that three major companies, including a Foxconn joint venture, which had bid for Indian semiconductor incentives, were encountering difficulties due to the absence of a technology partner.
According to the industry source, the Micron deal contributes to the vision of making India a semiconductor base, albeit not in a transformative manner since the major challenge lies in establishing India as a comprehensive semiconductor manufacturing hub.
