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Published on: Oct. 7, 2023, 12:01 p.m.
Will Micron usher in a chip revolution in India?
  • The star-studded foundation laying ceremony at Sanand

By Ritwik Sinha. Consulting Editor, Business India

While driving through the over 2,000 hectares Sanand industrial belt, about 50 km away from Ahmedabad in Gujarat, you may miss to note the Micron site, if your attention is not drawn to it. For, Sanand, which managed to make a mark on the global map when Tata Motors had shifted its Nano plant to Gujarat from West Bengal in 2008, has several such sites, where you can notice signs of construction, in different stages. The Micron semiconductor plant site, just a few blocks before the large-scale plant of Coca-Cola, however is the one which is grabbing most attention today, even as it is just dotted with a tiny signage at the front and ribbon barricades all around currently. From a distance, you could see the preliminary earth-leveling and other activities in progress, which are being spearheaded by Tata Projects.

The star-studded foundation-stone-laying ceremony of the plant (eventually it would cover a sprawling 93 acres) was conducted on 23 September in the presence of a slew of Union cabinet ministers, as also the chief minister of the state and other key dignitaries from the government and industry. And every prospective stakeholder is now referring to the deal and the consequent development, as the game-changing ‘next big thing’ proposition, both from the state and national perspective. ‘Milestone’, ‘historic,’ etc, are the superlatives which stakeholders are using to define the development. 

“The prime minister has assured the youth a bright future through the construction of this plant,” remarked Ashwini Vaishnaw, Union minister for information technology & railways, at the foundation-laying ceremony. “You can well call it another Maruti moment for the country’s economy,” enthused Krishna Moorthy, CEO & president, Indian Electronics & Semi-Conductor Association (IESA). “In the 1980s, Maruti Suzuki’s arrival in Haryana had ultimately led to the eventual evolution of a robust automobile ecosystem, which was emulated at other locations in the country. You can expect similar kind of outcome with Micron’s arrival. Considering the criticality of semiconductors and our huge import reliance for them, this development bodes well for our future in a medium- to long-term perspective”.

What market observers call another Maruti moment, has actually taken over four decades of efforts to shape up conclusively. According to Alkesh Sharma, former secretary, ministry for electronics & information technology (he retired in August and it was during his tenure that the Micron deal was finalised), the first serious attempt to create a base in semiconductor manufacturing was made in the 1980s, when a dedicated lab was created in Mohali. Later on, this lab was converted into a society and was handed over to the department of space.

“There have been many attempts in the past,” explains Sharma. “But the problem was semiconductor manufacturing somehow was always associated with requirements in space and defence sectors. Its massive utility in sectors like electronics or EVs is a recent realization, which led to creation of India Semi-Conductor Mission (ISM) in 2021. There was subsequent $10 billion incentive announcement under the mission. It expressed our serious intent to appear on the global semiconductor manufacturing horizon and Micron has resulted from that. It is a great beginning in that sense”. 

Pulling out all the stops

ISM mission, with its core intention of giving a new direction to India’s quest to become a global hub for semiconductor production, has been the differentiator, which industry representatives also vouch for. This became the cue for some states including Gujarat to tap this new sector with high growth potential; and they announced dedicated policies to attract the noted private players in the domain. Going by the early trends, the market was expecting the joint-venture between Taiwanese firm Foxconn and Indian metal major Vedanta to make the first move.

  • Gupta: offering the entire ecosystem

    Gupta: offering the entire ecosystem

There was an unprecedented buzz built around their proposed venture expected to take off in Gujarat with a staggering $17 billion plus investment. However, the deal was later called off. As per some speculative theories doing the rounds, there were a set of reasons for it – ranging from delay in some critical approval from the government side to the growing worries about Vedanta’s financial position. 

The disappointment, as observers point out, did not persist for too long, as the Micron investment got the nod from the government soon. If one looks at the timeline in the execution of the Micron deal, ‘pulling out all the stops’ probably could be the apt expression. It shaped up at a break neck speed with the reported intervention by the Prime Minister Narendra Modi himself. During his visit to the US in June, a formal announcement was made pertaining to Micron being the first one off the block in the semiconductors space.

The company reportedly had earlier shown its intentions to set up shop here and was in regular touch with ISM (it has been talking to the government agencies for nearly a year before it got the clearance this June). And after the formalisation of the deal in late June, the project has been in an unprecedented fast track mode. 

According to a senior government official, the PM had announced this project on 22 June in the US. And within six days of the announcement, an MoU with Micron Technology was inked on 28 June, which saw the approval letter being handed over to the American firm as per the norms of the state semiconductor policy of Gujarat. And 37 days after the announcement, Micron made payment for the site and, on very next day, the Gujarat Industrial Development Corporation (GIDC) gave possession to the company. “It all happened within a matter of few days,” informs Rahul Gupta, MD, GIDC, which is at the fulcrum of industrial facilitation in the state. 

Gujarat State Electronics Mission (GSEM) has played a decisive role in this deal and, according to Videh Khare, mission director, all the concerned departments which had a role in the approval process acted in tandem to get the project off the ground expeditiously. “When you start a new plant, you need CTE (consent to establish). It usually takes three months. But, in this case, the concerned department was sensitised in advance. They got this approval within 10 days. They then hired Tata Projects and it immediately began cleaning of the land. And on 23 September, we had ground-breaking ceremony. So, from formal announcement to ground-breaking, it exactly took three months,” Khare points out. CTE mainly refers to seeking clearance from the state pollution control board to begin plant construction. 

Khare also does not forget to point out that the state was in a ready mode to facilitate a deal of this kind, ever since it had framed a dedicated semiconductor policy last year. It has been in touch with prospective players in different countries apprising them of emerging opportunities in the state. As a part of this exercise, Gujarat government has been sending delegation to countries like Singapore, Taiwan, Malaysia and Japan since late last year. 

Basic highlights 

The project would be executed in two phases and the first phase is expected to see an investment tag of $2.75 billion – probably the largest investment in a single project in Sanand. As per available details, the US chipmaker will be investing $825 million in Gujarat in the next seven years, with 50 per cent of the total cost of setting up this facility borne by the Central government and the state government chipping in with 20 per cent of the cost in the form of various incentives. The combined investment of $2.75 billion is projected to create around 5,000 direct jobs and offer 15,000 community job opportunities over the next five years.

  • Another Maruti moment? Preliminary construction work has begun at the site

“This new manufacturing site will be an invaluable addition to Micron’s existing global assembly and test footprint,” informed Gursharan Singh, senior vice-president, Micron Technology, at the foundation stone-laying ceremony at Sanand. “Micron selected Tata Projects to construct our new facility”. The new site of 1.4 million sq ft facility would include 500,000 sq ft of clean room. As per technical details shared by Tata Projects, the project encompasses the design and construction of a first-of-its-kind DRAM (dynamic random access memory) and NAND (non-volatile flash memory) assembly and test facility in India.

The company will be using modern construction methods and techniques involving integrated EPC delivery through 4D BIM and hybrid modular accelerated construction. Furthermore, the Sanand Factory will be designed in accordance with LEED Gold Standards of the Green Building Council and will also integrate advanced water-saving technologies, enabling a Zero Liquid Discharge system. “Through this classic venture, we are not just building a state-of-the-art semiconductor assembly and test plant,” observed Vinayak Pai, MD & CEO, Tata Projects. “We are laying the foundation for India’s technological prowess on the global stage”. 

“This is basically going to be an ATMP plant (assembly, testing, marking and packaging), which is a critical phase of chip manufacturing value chain,” says Moorthy. And according to Gujarat government officials, it is not only in clearance that an amazing agility has been shown. The stakeholders are committed to push the plant to the production stage in a typical full throttle style. According to Khare, Micron has already applied for power supply. In the case of semiconductor plants, the power consumption is too high and, in this case, the requirement could be 15 MW or even more.

As per estimates, three separate lines will be provided to avoid any kind of redundancy in power supply. Power distribution companies are already in the loop and within next two-three months, Micron will have power and water connectivity at their doorsteps. The state government is expecting the completion of the first phase later next year and the actual production to commence in December, 2024.

“This plant is going to be the fastest built semiconductor facility anywhere in the world. In the first phase, it will cover 40 acres. And 16 months is an aggressive time line for the execution of this kind of project. After completion of first phase, we expect another two years for setting up of the next phase,” says Khare.

Chain reaction 

The deal has strategic significance for both the state and the country, in the near to long term, and is expected to be the harbinger of more action on Indian semiconductor stage now that the curtains have been lifted. For the state, which is going to host its next Vibrant Gujarat Summit in January (after a gap of five years), the commencement of its Micron plant construction adds a critical punch to its investors-friendly narrative. The state has provisioned for facilities around the Sanand plant for prospective vendors in the project and is keen to establish a robust ecosystem.

“Our industrial development strategy has got a new direction after the initiation of a new industrial policy in 2020. Now we are not just committed to support projects, big or small, but we are offering the entire ecosystem for the focused segment,” points out Rahul Gupta. And, in that sense, Micron deal will be a major showcasing point for the state (by January, the plant and the promised ecosystem would become more visible).

In fact, Gujarat is looking to create another semiconductor cluster at Dholera, a special investment region (SIR), which is about 100 km from the state capital and is known for its plug-and-play infrastructure offering. “We have clear plans to also make Dholera a global semiconductor hub in the future. Several companies are talking to us. Whether it is Sanand or Dholera, we will adhere to that basic rule of creating the ecosystem wherein all stakeholders contributing to the manufacturing value chain will be present in close vicinity, say within a radius of 5 km,” Khare emphasises.

  • Will it be the next big thing for India?

According to Moorthy of IESA, the development in Sanand has serious national and international implications. “It’s not only Gujarat. There are four other states which seem to be serious about creating large-scale semiconductor platforms within their boundaries. They are Karnataka, Telangana, UP and Tamil Nadu. They have dedicated electronics or semiconductor or combined policies. You can expect some noted action in these states soon,” says he, while adding that by giving green signal to Micron plant, India has made first concrete move to join the league of nations like the US, China, Japan, Taiwan and Korea, the leading semiconductor global hubs, in a future date.

“It’s a story which will gradually evolve and, by 2030, we could well be in a position to produce 30 per cent of our demand, which is growing at a rapid pace,” he adds. As per an IESA estimate, in next two to four years, India’s electronics industry in terms of value output would be close to $300 billion. And the share of chips used in them would be in the vicinity of $100 billion. 

Alkesh Sharma who was involved in kick-starting India’s semiconductor manufacturing story till recently, believes that the states which will make a mark in this segment are those who will leave no stone unturned in providing seamless infrastructure facility. “In a semiconductor plant, you can’t even afford to power fluctuation. You have to provide high grade water. These capabilities will have to be developed at any cost,” says he.

He, however, confirms that in the recent past several other companies have knocked at the doors of the ministry of electronics to be a stakeholder in India’s semiconductor space and some of those proposals may cross the clearance mark soon. The scene playing out at 40-acre land parcel in Sanand at present (first phase of Micron plant) may well be poised to expand exponentially in the not so distant future.

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