Gujarat is becoming an important player in India’s semiconductor manufacturing sector. The state is attracting semiconductor companies due to strategic investments, infrastructure, and supportive policies.
Gujarat was the first state to implement a Semiconductor Policy. The Gujarat Semiconductor Policy, introduced in 2021, aims to facilitate semiconductor manufacturing in the region.
It provides incentives to companies, including 40% capital expenditure assistance, making the state an attractive location for investment.
The policy also includes provisions for semiconductor fabrication facilities (fab) in the Dholera Special Investment Region (SIR), providing 75% subsidy on the first 200 acres of land purchase and 50% subsidy on additional land required for the fab or upstream/downstream projects approved under the Centre’s ISM.
The first project for Gujarat is a joint venture between Vedanta and Foxconn, which signed a Memorandum of Understanding (MoU) with the Gujarat government in 2022 to invest ₹1.5 lakh crore to set up a semiconductor and display manufacturing facility in Dholera SIR.
Recent developments include the Union Cabinet’s approval for Kaynes Semicon Pvt Ltd to establish a semiconductor manufacturing unit in Sanand, Gujarat. This initiative involves an investment of ₹3,300 crore and is expected to produce a significant volume of chips, enhancing the manufacturing capabilities of the region.
This unit will boost local employment and contribute to India’s self-sufficiency in semiconductor production.
In addition to Kaynes Semicon, major companies like Tata Electronics and Micron Technology have committed to the state.
Tata Electronics is partnering with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) to build a ₹91,000 crore fab in Dholera, which is projected to begin operations by 2026. This facility will produce 50,000 wafers per month.
Also, Micron Technology, an American chipmaker, is setting up a high-end semiconductor fabrication plant in Sanand, focusing on testing and assembly. This investment is part of efforts to enhance India’s semiconductor manufacturing capabilities and reduce reliance on imports.
How Gujarat Supports These Initiatives?
Gujarat’s infrastructure supports these initiatives.
The Dholera Special Investment Region (SIR) is being developed to host high-tech industries, including semiconductor factories. This region offers land, logistical advantages, and a well-established industrial ecosystem, making it suitable for large-scale manufacturing. The state’s strategic location along the Delhi-Mumbai Industrial Corridor (DMIC) provides easy access to major markets.
Power supply is another critical factor for semiconductor manufacturing. Gujarat has a total installed energy capacity of 23,550 MW, with a significant portion derived from renewable sources. The availability of reliable and cost-effective energy is essential for semiconductor fabrication, which requires substantial electricity.
Water availability is equally important for semiconductor production. The state has implemented measures to ensure a sufficient supply of ultrapure water needed for manufacturing. The establishment of desalination plants, including India’s first at Dahej, has improved water resource reliability, significantly reducing costs. This addresses the substantial water needs of semiconductor factories, which can consume up to 10 million gallons of ultrapure water daily.
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The Gujarat Semiconductor Policy incentivizes companies to develop their own water purification facilities, ensuring they meet the water quality requirements essential for chip manufacturing.
In parallel, Gujarat is investing in skill development initiatives to create a workforce for the semiconductor sector.
Collaborations with educational institutions, such as Gujarat Technological University and SVNIT, aim to enhance the skills of students and align them with industry needs. These initiatives are important for meeting the growing demand for skilled labor in semiconductor manufacturing. Recent increases in enrollment in electronic engineering courses reflect the positive impact of these efforts.
What’s the focus?
Gujarat’s strategy focuses on reducing India’s dependency on semiconductor imports.
As the global semiconductor supply chain faces disruptions, the need for local manufacturing is critical.
The state’s initiatives aim to establish a domestic semiconductor ecosystem, enabling India to meet its own needs while also serving international markets.
The increasing global demand for semiconductors, driven by advancements in technology such as artificial intelligence, 5G, and electric vehicles, provides Gujarat with an opportunity to play a key role in the international semiconductor market.
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The growing semiconductor industry in Gujarat is expected to positively impact other sectors, such as automotive, consumer electronics, and telecommunications. These industries rely heavily on semiconductor components, and establishing a robust local supply chain will enhance their competitiveness.
As Gujarat continues to develop its semiconductor ecosystem, it faces challenges, including the need for a chipmaking equipment industry and addressing talent shortages. Ensuring a steady supply of specialized equipment is essential for the success of semiconductor factories.
Also, as competition among states for semiconductor investments increases, Gujarat must refine its policies and incentives to maintain its leadership position.
In conclusion, Gujarat is on the path to becoming a semiconductor hub in India. It is poised to contribute to India’s goal of achieving self-sufficiency and becoming a global leader in semiconductor manufacturing.
The future of the semiconductor industry in Gujarat looks promising, and the state’s approach is expected to yield positive outcomes for local and global markets.
