Abu Dhabi-Israel consortium to set up $3bn chipmaking plant in India

By Arya M Nair, Official Reporter
  • Follow author on
Semiconductor Chip
Representational Image

Indian Semiconductor Manufacturing Company (ISMC), an international semiconductor consortium, has invested $3 billion in a chip-making plant in India’s southern state of Karnataka.

The consortium, ISMC is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor.

According to the state’s investment promotion division, apart from contributing to the country’s semiconductor growth story, India’s first semiconductor fabrication unit is expected to create more than 1,500 direct and 10,000 indirect employment opportunities.

ISMC and Vedanta, an Indian conglomerate, have applied for Prime Minister Narendra Modi’s $10 billion incentive plan to attract companies to build up semiconductor and display manufacturing operations in India, the government’s next big bet on electronics manufacturing.

The Modi government and its IT ministers laid out proposals for investment incentives in the sector, stating that they want India to become a major player in a global chip market dominated by Taiwanese and other Asian manufacturers.

Only 9 percent of India’s semiconductor requirements were sourced locally last year, according to a report by the industry body Indian Electronic and Semiconductors Association (IESA). The Indian semiconductor market was valued at $27 billion in 2021 and is expected to grow at a healthy CAGR of 16 percent from 2019 to 2026 to reach $64 billion in 2026, representing 22 percent of the total end-equipment revenues, IESA reported.

Some of the primary growth drivers of the semiconductor market include accelerated digitization, dependence on complex electronic systems to process vast amounts of data, and the increasing use of technologies like artificial intelligence (AI).

The investment is in line with the ‘Make in India’, an initiative to make and encourage companies to develop, manufacture and assemble products made in India and incentivize dedicated investments into manufacturing.

Related: ADDED holds workshop for private sector firms to benefit from UAE-India CEPA