Micron suppliers seek govt incentives, govt refuses, state governments could

With Micron all set to produce chips in India by December 2024, the company’s supply chain partners, who are looking to set-up co-location facilities here, have sought incentives.

“We are now evaluating and preparing for another co-location investment together with Micron (in India). The key consideration would be whether we can continue and receive the equal and same level of support from the government,” said Jeffery Chun, chief customer officer, Simmtech.

He added that the government should view its project not as a stand-alone one but as a part of the entire supply chain.

To commence operations at its chip assembly and packaging unit, Micron would need support from its supply chain partners such as South Korea-based Simmtech, Japan-based Disco Corp, Singapore’s Kulicke & Soffa and French industrial gas company Air Liquide. They will provide advanced equipment, processing and grinding tools, and ultra-high purity gasses.

Rajeev Chandrasekhar, minister of state for IT and electronics, said the government will not provide incentives for ancillary companies. However, the state governments would be free to do so. “The government will not get into it but certainly it could be the case that some state governments say that we will add on and create incentives. In order to build supply chain, state governments can give ancillary companies land, water, electricity type of support to attract them,” Chandrasekhar added.

Simmtech develops products such as module printed circuit boards (PCBs) for semiconductors’ memory expansion and substrates for semiconductor chip assembly. For Micron, such equipment would be important to not only start the operations but also to train its engineers before it starts the assembly and packaging of chips.

“To set up a factory here, we will first set up a training centre. As a matter of fact, Micron has already acquired a factory where we have asked for the help of our partners (like Disco Corp) to provide equipment in the shortest lead time,” said Gursharan Singh, senior vice president, global assembly and test at Micron Technology.

The company has committed to invest $825 million to set up its assembly, testing, marking and packaging (ATMP) unit in Sanand, Gujarat. Micron will receive 50% fiscal support for the total project cost of $2.75 billion from the Centre and incentives representing 20% of the total project cost from the Gujarat government.

Raja Vinay Singh, head of business development, large industries at Air Liquide, said, “We will place ourselves to help develop the semiconductor ecosystem in India. Utility players like Air Liquide should be seen as part of the ecosystem and the capex subsidy benefits should be extended for the full support of supply for us as well.”

“Land allocation in the vicinity of semicon players, uninterrupted power supply, the right-of-way issues and power transmission, and quick connection to the grid are the things we are looking at,” Singh added.

Micron is also looking to develop local partnerships in areas where it sees the potential to localise the supply chain.

Apart from incentives, Micron’s partners have also asked for government support in finding the talent for semiconductors. Financial Express