If you spent any time listening to the radio in Silicon Valley, prior to 1998, you probably heard a commercial about farms in Berkeley. There were multiple dairies in the San Francisco Bay Area until the land became so valuable that the farms were sold to make way for the buildings that now inhabit Silicon Valley. To someone moving into the area in the 1990s, when most of the farms were gone, finding out there was still a dairy in Berkeley was a bit novel. I’m not sure why, but when I hear news stories of proposed fabs in India, my mind goes to farms in Berkeley. Not that there shouldn’t be fabs in India. It just seems every time an Indian fab is announced, it’s met with: “That’s a good idea!” But then it never comes to fruition.
Global Fab Mania
The reshoring of semiconductor technology has created, for lack of a better term, fab mania. Every major semiconductor region has announced at least one new fab. Intel and TSMC have multiple new fabs in different countries, with TSMC building in the USA, Japan, and Germany. Intel has multiple USA announcements and one in Germany and Italy. ST Microelectronics and Infineon have announced new silicon carbide fabs in Asia, as well as expansion and joint ventures in Europe. A recent EE Times article reported that nine governments are providing funding for semiconductor manufacturing facilities worldwide:
The USA with the $52.7 billion CHIPS Act, which has not started funding yet.
The EU with its $47 billion Chips Act
Japan funding up to $6.5 billion in projects.
Singapore’s $19 billion investment
The UK’s $1.5 billion investment
Malaysia is offering significant tax incentives.
China’s $143 billion investment in its chip endeavors
The list goes on…
You then have Korea, which a few years back committed $450 billion to maintain its country’s dominance in the chip space. India has committed $922 million, but there are reports that as much as $10 billion might be available for the right project. That’s in the ballpark of $720 billion of government funding over the next 10 years for investment in the chip industry. No wonder Wall Street is jumping on board to help administrate the distribution of funds.
With the number of new fabs being proposed, you could change the abridged Jerry Sanders statement: “Real semiconductor companies need fabs!” to “Real tech countries need fabs!”
Fabs in India
But now back to India. Early in my analyst career, I was asked to perform an analysis on the potential for fabs in India. China was just emerging on the semiconductor scene, and my client was looking at who might be next. In my analysis, I determined that infrastructure, abundant clean water, sufficient clean power, and chip-centric politics were all required for India to successfully start a chip business. Another question I asked my client was, why do you need to build a chip infrastructure when you have foundries that can supply chips at a reasonable cost?
Since I completed that study, it appears that India has made improvements on the water and power side of the equation, and the politics appear to be focused on the long-term vision that is needed to support a chip ecosystem. Now all India needs is outside players to participate.
India currently has two working fabs, one that supplies chips to Indian defense research, and the other to Indian space research. The space research facility is running at 200mm and the defense research appears to be running at 150mm. The Indian Government has plans to modernize the space chip facility and upgrade its capabilities to 28nm. India has a significant amount of design activity, reportedly designing over 2000 chips each year. Many semiconductor companies such as Intel, AMD, TI, and IBM have design capability in India. India also has some packaging and test capability.
Micron and AMD have recently made announcements to increase their presence in India. Micron has announced an assembly and test facility. Investing $825 million. The rest will be supplied by Indian investments. AMD will invest 400 million in building a design center. In July, India announced that a 40nm fab announcement was coming soon. The follow-up announcement is yet to come.
Foxconn has recently pulled out of a proposed fab in which Global Foundries and STMicroelectronics were supposed to have chips built. This is not the only pullback of semiconductor fabs over time. Before spinning off its fabs, AMD was working with SemIndia in 2005 to manufacture chips in India. In 2007 Intel attempted to set up a fab. In 2014 IBM and Tower were proposing to build a fab in India, and HSMC working with STMicroelectronics and Silterra considered building a facility. The most recent was when Cricket Semiconductor pulled back from building an analog fab.
A recent podcast episode in the OjoYoshida report featuring Arijit Raychowdhury, Professor, of Electrical and Computer Engineering at Georgia Institute of Technology, is titled India’s Chips Journey Starts with Assembly, Test, Packaging. He states that the design activities were the first wave and that India is ready for the second wave, which is Assembly Test and Packaging (ATP). His premise is the second wave is where you get serious about manufacturing.
From a historical perspective, the growth of fabs in today’s semiconductor powerhouses followed ATP. Having watched Japan, Korea, Taiwan, and China mature over the years following this path makes a lot of sense. It gives India the chance to build the infrastructure and education needed to build and support fabs in the future.
My client of many years ago was convinced, India would eventually have fabs, as he said, “Dean it’s going to happen.” At this point, it still hasn’t happened and only time will tell if he was correct.