ISMC writes to the ministries to fast track approvals

ISMC Analog, one of the applicants for the Centre’s $10-b semiconductor manufacturing scheme, has urged the government to fast-track the expected incentive approval needed for the Tower Semiconductor-backed consortium to start building the plant by the end of the year, people knowledge of the development said.

“ISM [Indian Semiconductor Mission] were reminded this week to honor their word to issue letters of intent defining grants and tax exemptions by August to break ground by year-end, an official privy to ISMC’s dialogue with the mission said.

The letter from ISMC, dated August 8, was sent to ISM, IT Minister Ashwini Vaishnaw, MoS Rajeev Chandrasekhar, Karnataka CM Basavaraj Bommai, among others.

ISMC had conducted three rounds of questionnaires with the Indian Semiconductor Mission on its financial capabilities and technological prowess for its $3 billion analog fab. On June 17, ISMC officials along with bankers and investors met with ISM officials as the government had indicated an August timeline for approval.

An email sent to Next Orbit Ventures remains unanswered. Senior officials from the Ministry of Electronics and Information Technology confirmed receipt of the ISMC letter but said the ministry would do all its due diligence before approving such a plan.

According to an official, the semiconductor manufacturing plan is a long-term venture with a long gestation period. It would be “unwise to rush or jump the gun” only to find that something may have gone wrong.

ISMC had made presentations on manpower requirements, skill development initiatives and how it would build a ring of suppliers around its Mysuru plant for the analog chip factory. “Apart from the Indian government’s grant, exemptions also form a major requirement as part of the plan. If customs duties are not included as part of the plan, the project cost is bound to go up,” said a person aware of ISMC’s concerns.

The ISMC consortium has Israeli technology partner Tower, which specializes in analog process technologies used across a range of industries from automotive to infrastructure to medical technology.

“My top priority is for India to reduce its imports. India imports 94% of electronics. The basic raw material for this is semiconductor and display glass. Both we import and spend about $16 billion. We (Vedanta) are in the glass business, we makes optical fiber. We also make display glass in Japan, Korea, Taiwan, we are the fourth largest in the world. So it was natural that everyone would be our partner in semiconductor manufacturing. We chose Foxconn because it costs 200 billion company, a very entrepreneurial.”

Intel said in February it would merge Tower with itself to form a “fully integrated foundry business,” but the two companies will operate independently until the $5.4 billion deal closes, which is expected to take a year. Intel’s acquisition of Tower would also challenge the reach of Taiwanese major TSMC, which has over 53% of the global semiconductor market.

Towers CEO Russell Ellwanger recently met officials from the Ministry of Electronics and IT, including MoS Rajeev handrasekhar, about the approval process. Interestingly, Tower had fired off a letter to Prime Minister Modi seeking to fast-track a government proposal to encourage chip manufacturing in India.

The government announced the $10-b Semicon scheme three months after receiving this letter.

The absence of an executive director of the ISM, who would make recommendations to the ministry on the eligibility of applicants, has been cited as one of the reasons why the incentive approval process has stalled. Mac Pro Tricks