According to sources familiar with the matter, Micron Technology is nearing an agreement to invest a minimum of $1 billion (around Rs. 8,200 crores) in establishing a semiconductor packaging factory in India. The move aims to diversify the company’s geographical presence amidst increasing tensions between the US and China.
The announcement of the agreement may coincide with Prime Minister Narendra Modi’s upcoming visit to the US. The committed investment amount could potentially reach $2 billion (around Rs. 16,400 crores), although the details are subject to change as discussions are still ongoing, and the finalization of the agreement is not guaranteed.
This potential deal would be a significant achievement for Prime Minister Modi’s “Make in India” initiative, while also providing an opportunity for the US to strengthen critical supply chains outside of China.
Enhancing technological trade between the two countries is an important aspect of Modi’s state visit, as stated by US National Security Adviser Jake Sullivan during his visit to New Delhi on Tuesday.
In response to Beijing’s ban on the use of Micron chips in critical infrastructure, which raised concerns about the position of US chipmakers in the Chinese semiconductor market, Micron has taken steps to address the situation. One of these steps includes committing to investing an additional $600 million (approximately Rs. 4,900 crores) in its Chinese plant. This investment is intended to create job opportunities and bolster support for the local market in China.
The move to invest in India’s semiconductor packaging factory can be seen as part of Micron’s broader strategy to diversify its geographic footprint and reduce reliance on any single market, especially in light of the tensions between the US and China. By expanding its operations in India, Micron aims to tap into the country’s growing semiconductor industry and leverage the benefits of the Indian government’s “Make in India” initiative.
Efforts by the US to diversify advanced chipmaking are driven by concerns over the heavy reliance on Asian manufacturing centers like Taiwan, particularly in the context of escalating tensions with China. Micron, the largest American memory chipmaker, is also taking steps to address this issue. In addition to its potential investment in India’s semiconductor packaging factory, Micron has secured financial support for a next-generation plant worth $3.6 billion (around Rs. 29,500 crores) that it intends to establish in Japan.
By expanding its manufacturing capabilities in Japan, Micron aims to further diversify its supply chain and reduce dependence on a single manufacturing hub. This move aligns with the broader global trend of countries and companies seeking to establish or enhance domestic chipmaking capabilities to ensure more secure and resilient supply chains for critical technologies. The reluctance of the Indian Technology Ministry, Ministry of External Affairs, and Micron representatives to comment on the matter suggests ongoing negotiations and the sensitive nature of these discussions.
Prime Minister Narendra Modi is embarking on his first formal state visit to the United States on June 21, where he will be hosted by President Joe Biden and attend a banquet the following day. As part of his visit, Prime Minister Modi is scheduled to address the US Congress. In an effort to attract chipmakers to India, Modi has pledged a substantial investment of $10 billion (approximately Rs. 81,900 crores), with the Indian government offering to cover half of the setup costs for all semiconductor sites.
Earlier reports from the Business Standard newspaper indicated that Micron was expected to receive Indian government approval for a $1 billion (roughly Rs. 8,200 crore) assembly and packaging facility in India. This aligns with Micron’s potential investment in a semiconductor packaging factory mentioned previously, signaling the company’s interest in expanding its presence in India as part of its global diversification strategy.
The Indian government’s commitment to supporting the semiconductor industry through financial incentives and infrastructure development underscores the country’s ambition to become a major player in the global semiconductor market and attract investments from leading chipmakers.