Centre clears $2.7 billion Micron chip testing plant; unit expected to create 5,000 jobs

The central government has approved US-based chip maker Micron’s project to set up a semiconductor test and packaging unit worth USD 2.7 billion in the country, sources told PTI.

The project is expected to create 5,000 jobs. The government agreed to production-linked incentives worth 110 billion rupees ($1.34 billion) for the plant, which is set to be built in PM Modi’s home state of Gujarat, Reuters reported quoting an official.

Micron specialises in computer memory products, flash drives etc. It will set up an OSAT plant in India which will test and package its product to make it ready for use.

“The project was cleared about a week back,” a source told PTI, confirming details of the project. Micron’s OSAT (outsourced semiconductor assembly and test) proposal was cleared after the government modified the semiconductor programme and increased the incentives.

In the first phase, the government had cleared four OSAT projects which included proposals by Tata Group, Sahasra Semiconductors.

“Sahasra Semiconductors is the first OSAT plant that is expected to start production soon,” another source told PTI.

Micron Technology’s plans come as the White House presses U.S. chip companies to invest in India with talks ongoing about possible further investments, U.S. administration officials told Reuters.

Biden wants domestic companies to decrease the risks of doing business in China while better integrating the U.S. economy with that of the world’s largest democracy, one U.S. official said.

A senior Biden administration official said the White House was “encouraged” by the number of U.S. firms considering India investments.

China in May said Micron had failed a security review and barred operators of key domestic infrastructure from purchasing products from the United State’s biggest memory chipmaker, angering the Biden administration. The U.S. Commerce Department declined to comment.

An Indian industry source familiar with Micron’s approvals said the so-called Assembly Testing Marking and Packaging will be built in the city of Sanand.

Such units test and pack semiconductor chips, but do not manufacture them. Micron could procure and package chip for clients at the plant, or other companies could send their chips for testing before shipping.

The source added that Micron’s India plant would boost Modi’s vision of making India a semiconductor base but true success would require actual manufacturing.

Reuters reported this month that three big companies, including a Foxconn joint venture, that bid for Indian semiconductor incentives were struggling due to the lack of a technology partner.

The Micron deal “helps the vision but not in a phenomenal way because still, the major part of the puzzle lies in setting India as a semiconductor base,” said the industry source.

With inputs from agencies

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