India Wants In Again
In our note of 6/25/21, we indicated India’s desire to become a producer of LCD panels based on the development of a local fab. We noted that in 2015 the Indian government was said to have contacted a number of LCD panel producers under the auspices the 2014 “Made in India” plan, trying to convince them to build LCD panel production fabs in the country. Panel producers however were not convinced that the country could support a local panel fab and such a project was never developed. India has had better luck with CE assembly, having attracted Foxconn (2354.TT) and a number of component suppliers to build out facilities by providing cash incentives and tax breaks, but politics, a low-productivity workforce, and a lack of stable resources and infrastructure, have kept display producers from building local panel fabs, despite the growing local demand.
It seems that India is trying again, this time also trying to attract semiconductor foundries to build out production fabs on the sub-continent. This week the Indian government approved a project that will invest ~$30.2b US to create an Indian semiconductor and display that will support two greenfield semiconductor fabs and two display fabs, with about 33% of the funds going toward a co-funding arrangement for those fabs. The remaining capital allocation will be divided between developing large scale electronics and hardware manufacturing clusters (24%) and battery, solar panel, and white goods production centers. (43%).
Companies that are involved in compound semiconductor production , silicon photonics, and sensor manufacturing will be eligible for up to 30% of their capital expenditures, while IC design companies will receive up to 50% of their expenditures, based on sales volume, with the government creating a ‘semiconductor mission’ to oversee the ecosystem, which will include global experts in order to smooth the implementation of such projects.
While this all sounds like a solid plan, India has yet to show panel producers (and less likely semiconductor producers) that it can actually provide the massive infrastructure that would be needed to support either industries. Aside from the need for a skilled workforce, reliable water, power, and transportation sources are an about necessity for such multi-billion dollar commitments, but the real problem is still the chicken-and-egg situation around supporting suppliers that are key parts of the semiconductor or display fabs themselves. For display producers, glass substrate suppliers tend to be close by or co-located on fab grounds and fluorine production is also an on-site requirement for an efficient display fab and semiconductor fabs rely on similar gas or chemical resources to maintain continuous production. The establishment of these key industries is a primary part of setting the path toward convincing either company type to establish a production base in the country and India has yet to prove they can do so and the competition from other regions who have well-established infrastructure makes it an exceedingly difficult task.
It seems that India is trying again, this time also trying to attract semiconductor foundries to build out production fabs on the sub-continent. This week the Indian government approved a project that will invest ~$30.2b US to create an Indian semiconductor and display that will support two greenfield semiconductor fabs and two display fabs, with about 33% of the funds going toward a co-funding arrangement for those fabs. The remaining capital allocation will be divided between developing large scale electronics and hardware manufacturing clusters (24%) and battery, solar panel, and white goods production centers. (43%).
Companies that are involved in compound semiconductor production , silicon photonics, and sensor manufacturing will be eligible for up to 30% of their capital expenditures, while IC design companies will receive up to 50% of their expenditures, based on sales volume, with the government creating a ‘semiconductor mission’ to oversee the ecosystem, which will include global experts in order to smooth the implementation of such projects.
While this all sounds like a solid plan, India has yet to show panel producers (and less likely semiconductor producers) that it can actually provide the massive infrastructure that would be needed to support either industries. Aside from the need for a skilled workforce, reliable water, power, and transportation sources are an about necessity for such multi-billion dollar commitments, but the real problem is still the chicken-and-egg situation around supporting suppliers that are key parts of the semiconductor or display fabs themselves. For display producers, glass substrate suppliers tend to be close by or co-located on fab grounds and fluorine production is also an on-site requirement for an efficient display fab and semiconductor fabs rely on similar gas or chemical resources to maintain continuous production. The establishment of these key industries is a primary part of setting the path toward convincing either company type to establish a production base in the country and India has yet to prove they can do so and the competition from other regions who have well-established infrastructure makes it an exceedingly difficult task.
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