India has been recognised as a semiconductor destination by Israel's Tower Semiconductor, one of the Top 10 worldwide chip players. It had previously done so in 2022 as well as in 2007 with the International Semiconductor Consortium (ISMC). However, the approval of the application by the Ministry of Electronics & IT and India Semiconductor Mission was impeded by Intel's effort to purchase Tower (in a $5.4 billion transaction that ultimately failed). Tower has reportedly reapplied for a $8 billion chip fabrication plant, according to press reports.
Sources, however, suggest Tower will want a partner in investing for this idea. Danish Faruqui, CEO of Fab Economics, a US-based boutique semiconductor Fab/ATP site Greenfield consulting and implementation consultancy firm, discusses the possible implications of Tower Semi's $8 billion semiconductor manufacturing plan for India in an exclusive interview with Business Today.
Danish Faruqui: Although Tower Semi's $8 billion semiconductor production unit in India is a huge victory, we must see the numbers in a broader context to fully appreciate the scope of the company's action.
In a $5.4 billion deal, Intel Corporation was set to acquire Tower Semi's entire manufacturing footprint as well as its design and intellectual property capabilities. However, the acquisition fell through despite Intel's unwavering 18-month pursuit of regulatory approvals in every part of the world, with the exception of China, where it was unable to obtain SAMR regulatory approval despite multiple extensions of the deal's closure timeline.
The total income of Tower Semi is barely about $1.5 billion. It is therefore noteworthy that Tower Semi is preparing to invest $8 billion in an Indian factory, the greatest investment in the company's history. Tower Semi's most recent fab capacity expansion project involved only a $300 million investment to buy and own Intel's New Mexico Fab's 300mm wafer size analogue manufacturing capacity corridor.
Therefore, it is evident that Tower Semi is aware of the critical success elements for investing in India, including the unmatched 50% capex-linked subsidy provided by ISM, which has enabled Tower Semi to make historically significant investments in the country.
Tower Semi has invested in Japan, Italy, and the United States and India to expand its fabrication capacity in the years 2014, 2021, and 2023. The $8 billion investment would more than triple Tower Semi's total investment made in the US, Italy, and Japan over the previous ten years. This indicates the level of confidence that foreign investors have in India's semiconductor roadmap. For a player like Tower Semi, the magnitude of India's victory is almost unfathomable.
