MUSCAT: Seeking to jumpstart the growth of a domestic semiconductor industry, Invest Oman – the premier investment facilitation arm of the government – has invited international investors specializing in Outsourced Semiconductor Assembly and Testing (OSAT) to consider setting up operations in the Sultanate of Oman.

Supporting Invest Oman in this initiative is the Ministry of Transport, Communications and Informational Technology (MTCIT), which has been spearheading the development of a full-fledged semiconductor industry in support of its Digital Economy goals.

OSAT refers to companies offering third-party integrated chip (IC) packaging and testing services for silicon devices produced by foundries before they are placed on the market for sale. The global OSAT market is projected to surge to $44.047 billion in value by 2027, up from $30.679 billion in 2021, said Invest Oman, citing IDC statistics.

Significantly, investment in an OSAT facility in Oman is estimated to range between $130 – 140 million, inclusive of around $110 million towards capex costs. For its part, the Omani government has pledged to pitch in with allocations of land of up to 100,000 m2 via a Public Private Partnership arrangement.

Furthermore, in addition to a commitment towards sharing of investments, the government is also offering incentives in the form of tax exemptions, subsidized electricity, water and other utilities, salary subsidies for local employees for the first two years, training subsidies and other government support.

Also boding well for the success of OSAT investments in Oman are a number of geostrategic, regulatory and economic factors, says Invest Oman. Given Oman’s strategic location midway between the East and West, a domestic OSAT industry will have advantageous access to the regional and international semiconductors market and its global supply chain. Additionally, investors can choose from an array of suitably developed industrial clusters distributed across the country.

“In addition to the Middle East and global target markets, a promised semiconductor ecosystem in Oman is developing with high government support, therefore a good number of fabless companies expected to be established in Oman which will outsource their packaging to the OSATs,” the investment agency added. (Fabless companies are those specializing in the design of semiconductor chips and hardware devices, while outsourcing their fabrication (or fab) to a specialized manufacturer called a semiconductor foundry.)

Already, some of the building blocks of a future semiconductor industry are being set in place by various public and private sector organisations. ITHCA Group, the ICT investment arm of Oman Investment Authority (OIA), has acquired a strategic stake in US-based semiconductor design and service company, GSME, which has set up an advanced chips-design and development lab in Muscat.

Last October, the government hosted a high-level delegation from South Korea’s SK Hynix Inc, the world’s second largest semiconductor company, as part of a move to attract major players from the global semiconductor industry to explore opportunities in Oman.

Adding to Oman’s investment appeal is the development of a 100,000-tonnes per annum capacity polysilicon project at Sohar Freezone at a cost of $1.35 billion. Promoted by Oman-based United Solar Holding Inc, the project is expected to provide critical raw material for, among other industries, semiconductor manufacturing in Oman.