India may be the next destination for Applied Materials, the US semiconductor maker

US major Applied Materials Inc is planning to set up a plant in India which would make some of the parts and components for highly complex equipment which are used for manufacturing of semiconductor chips by fabmakers across the globe..

According to sources in the know, the $17.2 billion American giant – a global leader in providing equipment, services and software to the semiconductor industry – is in talks with the government.

If the plan materialises, it could provide a big push to the government’s desire to have a semiconductor industry and eco-system in the country. It would also integrate India into the company’s global supply chain.

Two earlier efforts to create an eco-system for the semiconductor industry in India failed, once when Intel was going to set up a fabrication plant in 2007 and once when two approved projects by the government failed ultimately to take off in 2013

It is not clear whether Applied Materials will be coming through the Production Linked Incentive scheme or independently of it.

To attract investment in semiconductors and in technology intensive areas, the government has constituted a committee under the Minister of Commerce and Industry.

The government recently floated an EOI inviting prospective global as well as Indian consortiums to set up a manufacturing plant and also suggest what incentives would persuade them to go ahead. The government has earmarked over $1 billion as incentives for the sector.

Applied Materials is also bringing its venture capital fund, Applied Ventures, into the country to invest in start-ups in the deep technology space.

“In the last two years, there have been a lot of tech-based start-ups. Our approach will be to act as an accelerator, first partner with them and wherever we see value, invest in them, provided they are related to the semiconductor business,” said Suraj Rengarajan, Applied Materials CTO in India.

The company has declined to talk about its discussions. But Rengarajan said the company has identified key areas where it might invest – in start-ups in the areas of Artificial Intelligence, the cloud, material sciences, applications of AI, robotics, healthcare, and opportunities arising out of 5G.

Rengarajan said the company’s India strategy is the same as for countries such as Taiwan, Israel and South Korea.

Applied Materials manufactures highly complex capital equipment for the semiconductor industry which sources say is priced at anything between $3-7 million and consists of thousands of parts.

It is supported by a global supply chain. Many of the components that go into the making of the machines are imported. Some are made by just a few suppliers, for instance, a specified magnet used is made only by one company in New Zealand.

Currently, it has 12 manufacturing plants across the world including the US, Europe, Israel, Taiwan, Singapore, and South Korea. Business Standard News