Tata-SemiCon Fab India in Likely Partnership PSMC, With Taiwanese Chipmaker

Tata Semiconductor Plant to likely be a Partnership with PSMC

Tata Group, India's largest conglomerate, has applied to the Union Ministry of Electronics & Information Technology(MeiTY) to set up a semiconductor wafer fabrication facility under the India Semiconductor Mission(ISM).

The ISM, unveiled by PM Narendra Modi's government in 2021 with an outlay of Rs 76,000 crores ($8 billion), will provide financial incentives to companies investing in semiconductors, display manufacturing, and design ecosystems. 

"The two fab proposals that have been received by India, and represent a total investment of about $22 billion, are one from Tata and the other from Tower Semiconductor," Minister of State for Electronics and IT Rajeev Chandrasekhar confirmed during the Mumbai Tech Week organised by Tech Entrepreneurs Association of India (Team).

The group plans to produce 65 nm (nanometer) mature nodes and then transition the manufacturing process to 48 nm and eventually to 28 nm. These nodes support various applications such as graphic processor units (GPU), consumer electronics, and the Internet of Things (IoT), according to a report in The Economic Times.

During the recent 'Vibrant Gujarat' summit, Tata Sons Chairman N Chandrasekaran announced that his group will announce a "huge semiconductor fab" in Dholera that will begin operations in 2024.

The conglomerate is reportedly exploring partnerships with two Taiwanese contract chipmakers — Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group — for its proposed foray into semiconductor manufacturing. 

The Tata Group has also applied to set up an ATMP ( Semiconductor Assembly, Testing, Marking and Packaging ) plant. Under the ISM incentive scheme, fiscal support of 30% of the capital expenditure will be provided to firms setting up Semiconductor ATMP facilities in India.

Though he did not specifically name the Tata Group, PSMC chairman Dr Frank Huang had earlier confirmed plans by his company to enter into a partnership for building a semiconductor plant in India.

Addressing a news conference in Taipei last month, Dr Huang said, "We are preparing to sign an agreement with India to help it build a plant. It is determined to build one. We are trying to figure out how to support them since we have had similar experiences in China," 

"Local semiconductor companies now have to think more seriously about globalisation than before," Huang added.

PSMC was also part of a delegation of semiconductor manufacturers from Taiwan that visited Chandigarh and Gujarat as part of an exercise to identify potential sites for setting up semiconductor manufacturing plants in India,

PSMC is Taiwan's third-largest contract chip manufacturer and the sixth-biggest in the world. It is expanding with plans to build a series of fab factories outside its base. The company develops, manufactures, and distributes advanced memory components.

Among the four key contract chipmakers in Taiwan, PSMC specialises in mature technologies and owns two 8-inch wafer fabs with a monthly capacity of 110,000 units and three 12-inch wafer plants with a monthly capacity of 110,000.

The other three contract chipmakers are Taiwan Semiconductor Manufacturing Co. — the world's largest chip behemoth with a share of more than 50 per cent of the global market — United Microelectronics Corp and Vanguard International Semiconductor Corp. TSMC, UMC and PSMC account for 62% of the worldwide market.

In its earlier avatar, PSMC was the biggest memory chip maker in Taiwan, but the company had to delist in 2012 as it was drowned in a $4 billion debt crisis driven by heavy losses in a DRAM cyclical downturn in 2012. It was forced to close down its most advanced chip plant and sell the assets to US-based Micron Technology Inc. It also gave up its stakes in a joint venture with Japan's Elpida Memory, then its most crucial tech partner.

The struggling company under the leadership of Dr Huang effected a change of strategy as it moved away from heavily commoditised memory chips and recast itself as a pure play foundry player that produces driver ICs for flat panels, imaging processors and power management chips. This helped the company stage a remarkable recovery and a turnaround.

In a better shape now, PSMC is investing 800 billion yen ($5.5 billion) in a joint venture with financial group SBI Holdings to build a plant in Japan's Miyagi prefecture. The proposed fab factory in Japan will produce microcontrollers and artificial intelligence chips for vehicles alongside the automotive display drivers and power management chips PSMC makes in Taiwan.

In October 2015, PSMC's parent company, Powerchip Investment Holding Corp formed Nexchip Semiconductor Corp with the Sichuan provincial government to build and operate a fab in Chengdu, China.

Nexchip makes less-advanced chips, such as display driver ICs, using 150-nanometer and 90-nanometer processes.

Powerchip Investment Holding owns about 27.44 per cent of Nexchip Semiconductor shares and a 23.49% stake in Powerchip Semiconductor.