Government approves semicon fab worth Rs 51,550 crore

semicon-fabThe Indian government has approved setting up of two semicon fab manufacturing facilities in the country worth Rs 51,550 crore.

Jaiprakash Associates and Hindustan Semiconductor Manufacturing are the two consortiums approved by government of India for semicon fab. Both these facilities are expected to provide a big boost to the electronics system design and manufacturing eco-system in the country.

Jaiprakash Associates has tied up with IBM, US and Tower Jazz, Israel for semicon fab. The outlay of the proposed FAB is about Rs 26,300 crore and will manufacture 40,000 wafers per month of 300 mm size, using advanced CMOS technology. In phase I, the fab will focus on 90, 65 and 45 nm node, phase II will focus on 28 nm node and phase III will focus on 22 nm node. The proposed location for Jaiprakash Associates is Greater Noida.

Hindustan Semiconductor Manufacturing (HSMC) has tied up with ST Microelectronics, France and Silterra, Malaysia for semicon fab. The outlay of the proposed FAB is about Rs 25,250 crore for the fab facility of 40,000 wafer starts per month of 300 mm size, using advanced CMOS technology. Technology nodes proposed are 90, 65 and 45 nm nodes in Phase I; and 45, 28 and 22 nm nodes in Phase II. The proposed location for HSMC is Prantij, near Gandhinagar, Gujarat.

The government has also approved the package of incentives for the two consortia. This package includes incentives already available under the Modified Special Incentive Package Scheme (M-SIPS) and deduction available for expenditure on R&D under the Income Tax Act.

In addition, FAB facilities will also be eligible for investment linked deduction under Section 35AD of the Income Tax Act. The government will provide Viability Gap Funding (VGF) in the form of an interest free loan for a period of 10 years.

The government has also asked the technology providers to take equity of at least 10 percent in the proposed projects. The government will also get 11 percent equity in the said projects. The details of the incentives will, however, be worked out based on appraisal of DPR (Detailed Project Reports) to be submitted by the two consortia within a period of two months.

The government is inviting expression of interest from other leading companies intending to establish FAB in India to be submitted within four weeks. Government of India would extend the special package of incentives to the qualified proposals.

Kapil Sibal, minister of communications & information technology said, “All this will help set up a critical pillar required to promote Electronics System Design and Manufacturing (ESDM) in the country. The semiconductor Wafer FABs when set up will stimulate the flow of capital and technology, create employment opportunities, help higher value addition in the electronic products manufactured in the country, reduce dependence on imports and lead to innovation.”

The proposed FABs will create direct employment of about 22,000 and indirect employment of about one lakh.

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