In order to develop a vibrant semiconductor ecosystem, the Union Cabinet chaired by Prime Minister Narendra Modi on Monday approved the proposal of Kaynes Semicon Pvt Ltd to set up a semiconductor unit in Sanand, Gujarat.

The proposed unit will be setup with an investment of Rs 3,300 crore. As per an official release, the capacity of this unit will be 60 lakh chips per day.

The chips produced in this unit will cater to a wide variety of applications which include segments such as industrial, automotive, electric vehicles, consumer electronics, telecom, and mobile phones.

The Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India was notified on December 21, 2021 with a total outlay of Rs 76,000 crore. In June, 2023, the Union Cabinet had approved a proposal for setting up a semiconductor unit in Sanand, Gujarat.

In February, 2024, three more semiconductor units were approved. Tata Electronics is setting up a semiconductor fab in Dholera, Gujarat and one semiconductor unit in Morigaon, Assam. CG Power is setting up one semiconductor unit in Sanand, Gujarat

Construction of semiconductor units is progressing at a rapid pace and a robust semiconductor ecosystem is emerging near the units. They will bring an investment of almost Rs 1.5 lakh crore and cumulative capacity of these units is about 7 crore chips per day.

Tata Group hopes that the commercial production of semiconductors chips at the two plants – in Gujarat and Assam, would start in 2026. Chip shortages during Covid highlighted the importance of indigenous manufacturing to fill the deficiency for national security and also to galvanise indigenous innovation.

American chip maker Micron’s high-end semiconductor fabrication plant at Gujarat’s Sanand, which is India’s first, is coming up at a rapid pace. It is expected to be operational in late 2024.

In total, work on four semiconductor units is currently underway – 3 in Gujarat and 1 in Assam.

Semiconductors are crucial for modern society and are needed for manufacturing an array of devices including phones, medical devices, cars and electronic gadgets. As per media reports, approximately 70 percent of total manufacturing capacity is concentrated in South Korea, Taiwan, China, the US, and Japan.

India will soon start commercial production of semiconductors and related products and become a global power in this sector similar to the technology, nuclear, and digital spaces, said Prime Minister Narendra Modi earlier this year, as he laid foundation stones for the three semiconductor plants. India has lost decades in semiconductor manufacturing and now is the time to move ahead, he had said.

As part of its Atmanirbhar and Make in India plan, the government launched production incentive (PLI) schemes in varied sectors, including electronics, to make Indian manufacturers globally competitive, attract investments, enhance exports, integrate India into the global supply chain and reduce dependency on imports.