Micron's $1 Billion Investment in India's Semiconductor Industry

Micron, a prominent US memory manufacturer, is set to finalize an investment agreement with the Indian government, as reported by Bloomberg. The agreement entails a commitment of at least $1 billion (approximately INR 71 crore) to establish a state-of-the-art semiconductor assembly and testing facility in India.

The official announcement of this significant deal may coincide with the upcoming visit of Indian Prime Minister Modi to the United States. Notably, back in April 2023, credible sources revealed Micron's approval from the Indian government for a $1 billion investment in packaging, testing, and module production lines within India.

Previously, the Indian government had outlined a comprehensive subsidy program worth $10 billion to attract foreign semiconductor manufacturers. The program aims to bolster India's semiconductor industry capabilities by encouraging investments in wafer fabrication plants, packaging and testing facilities, module factories, and IC design centers. Eligible investments are eligible for a grant amounting to 50% of the investment value.

Micron currently operates production facilities in the United States, Japan, Malaysia, Singapore, mainland China, and Taiwan. Over the past year, the company has actively sought new locations for assembly and testing operations. In addition to their investment plans in India, Micron has also announced a substantial investment of over 4.3 billion Chinese yuan in their Xi'an-based packaging and testing facility in China. This investment primarily aims to acquire cutting-edge packaging equipment from Taiwan's Powertech Technology Inc. and expand facilities to accommodate advanced and high-performance packaging and testing equipment, catering to the demands of their Chinese clientele.

Industry statistics project the memory packaging, testing, and modules market to reach a valuation of $42 billion by 2026. While packaging and testing are critical stages in memory production, they offer faster production speeds and lower investment requirements compared to wafer fabrication plants. Several companies have already responded positively to India's semiconductor subsidy program, with plans underway to establish semiconductor production lines in India. For instance, Hon Hai (Foxconn) intends to collaborate with Vedanta for investments in India, while the Tata Group has expressed its intentions to establish a wafer fabrication plant within the country.