Micron to invest $825 million to set up its first chip factory in India

It seems that Tesla and SpaceX aren’t the only American enterprises to think on making investments in India in recent times. Micron, leading US chipmaker, which announced that it plans to build a new assembly and test facility in Gujarat, India. The new facility will be tasked with enabling the assembly and test manufacturing of both DRAM and NAND products, as well as addressing the demand from domestic and international markets alike.

Media reports reveal that the semiconductor giant will be investing up to $825 million to set up the new chip assembly and test facility, which will be its first factory in the world’s second-largest internet market. With support from the Centre and Gujarat govt, the total investment in the factory will amount to $2.75 billion.

Breaking the total investment amount, nearly half of it will come from the Central government, while 20% will come from the state of Gujarat. Under the government’s “Modified Assembly, Testing, Marking and Packaging (ATMP) Scheme,” the company will receive fiscal support of 50% for the entire cost of the project from the Central government, while incentives representing 20% of the same will be provided by the state of Gujarat. The company noted that its new facility will focus on transforming wafers into ball grid array (BGA) integrated circuit packages, memory modules and solid-state drives.

Micron’s plan has been approved by the Indian cabinet as well. “Micron’s investment to set up assembly and test manufacturing in India will fundamentally transform India’s semiconductor landscape and generate tens of thousands of high-tech and construction jobs,” Ashwini Vaishnaw, Union Cabinet Minister for Railways, Communications, Electronics and IT, commented on the matter. “This investment will be a crucial building block in the country’s blossoming semiconductor ecosystem.”

This move not only showcases the growing importance of India as a global player in the semiconductor market but also highlights the country’s potential to attract major investments in advanced technology manufacturing. The presence of a leading chip maker like Micron is expected to enhance India’s capabilities in chip production and assembly, driving innovation and fostering a robust domestic semiconductor ecosystem.

The company’s decision to establish a chip assembly and test facility in India also aligns perfectly with the goals of the ‘Make in India’ initiative, and not only bolsters the country’s semiconductor manufacturing capabilities but also significantly reduces the reliance on imported chips. This is something that benefits India in the long run, especially since India is yet to manufactured any chips locally so far, despite its semiconductor market growing steadily at a CAGR of nearly 19% and which is slated to reach $64 billion in 2026.

The construction of the facility is expected to begin this year, and the first phase of the project is slated to be operational in late 2024. A second phase of the project is expected to start toward the second half of the decade, Micron noted. “We are excited about the steps India is taking to develop the local semiconductor ecosystem,” Sanjay Mehrotra, Micron President and CEO, said. “I am grateful to the Indian government and all of the officials involved that made this investment possible. Our new assembly and test location in India will enable Micron to expand our global manufacturing base and better serve our customers in India and around the world.”

Furthermore, Micron’s investment in the new facility is expected to have a substantial impact on job creation and skill development in India. The establishment of the chip assembly and test facility is expected to generate a significant number of employment opportunities, both directly and indirectly. The project will require a skilled workforce, creating avenues for training and upskilling local talent in semiconductor manufacturing. The company has noted this, and it announced in its official statement that both the phases will create up to 5,000 new direct jobs at Micron, as well as 15,000 jobs within the community over the next several years.

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