International Semiconductors Consortium (ISMC) to invest ₹22,900 crore in Karnataka: Why it's a big deal

The investment is expected create a 65 nm Analog Semiconductor Fabrication plant.

Karnataka government has signed a memorandum of understanding (MoU) with Israel-based International Semiconductor Consortium (ISMC) which will invest ₹22,900 crore ($3 billion) in Karnataka state to set up the country’s first and largest semiconductor chip-making plant on Sunday. The investment is expected create a 65 nm Analog Semiconductor Fabrication plant.

Karnataka government has signed a memorandum of understanding (MoU) with Israel-based International Semiconductor Consortium (ISMC). 

Additional Chief Secretary in the Department of IT, BT Dr EV Ramana Reddy on behalf of Karnataka and ISMC director Ajay Jalan signed the MoU in the presence of Chief Minister Basavaraj Bommai.

“Karnataka is pioneer and leader in IT & BT, Startups and now in Semiconductor manufacturing. This is the breakthrough into new Era which will help in manufacturing of electronic products and automobiles and make India to be Aatmanirbhar,” Bommai tweeted recently, lauding the leadership of Prime Minister Narendra Modi.

This is in line with Central Government’s India Semiconductor Mission, which aims to drive India's long term strategies for developing semiconductors and display manufacturing facilities and the semiconductor design ecosystem.

Karnataka: A premier investment destination

The MoU with ISMC will make Karnataka the place to look forward to in semiconductor technology, With robust policies, a committed team, best-in-class infrastructure, and an ever-increasing talent pool of workers, Karnataka is on its way to becoming a premier investment destination Chief Minister Basavaraj Bommai said in his address, after the signing of the MoU.

Calling this a significant MoU for the state amid the competition among various states to attract semiconductor fabs Bommai said, “Karnataka understands that it’s not just the fiscal incentives that matter but the availability of a conducive eco-system and overall ease in operations are also important. The state has one of the best infrastructures in the country and an abundant skilled talent pool”

“As a state, we are not just trying to bring down the entry barriers for businesses but also make it easier to exit businesses, should it be so required,” he added.

Multiplier effects

“We are happy to support global firms to set up manufacturing facilities here. Semiconductor production in Karnataka will provide further impetus to the economy of the state,” said Dr C N Ashwath Narayan, State Minister for Higher Education.

It is reported that the company has requested 150 acres of land in Mysuru’s Kochanahalli Industrial area and is set to fully implement the project over the next 7 years. This MoU has also provided a forum for technology and cultural exchange between Israel and India.

The project is expected to generate more than 1500 direct and 10,000 indirect employment opportunities and ancillary semiconductor ecosystem industry development in the area with significant multiplier effects.

E V Ramana Reddy said the uptick in Indian investment in semiconductors coincides with the global demand for semiconductors amid a shortage expected to run through 2025.

“We have suggested an Electronics and Systems Design cluster in Mysuru as the investment destination for ISMC,” said Reddy.

Semicon India-2022

The investment comes at a time when Prime Minister Narendra Modi recently urged the industry to make India a global hub for semiconductors, in his inaugural address at the Semicon India-2022 conference in Bengaluru, on 29th April.

There was a collective aim to establish India as one of the key partners in global semiconductor supply chains and position India on the Semiconductor map of the world and build a vibrant semiconductor innovation and manufacturing ecosystem.

Modi said India has an exceptional semiconductor design talent pool which makes up to 20 per cent of the world's semiconductor design engineers. Almost all of the top 25 semiconductor design companies have their design or R&D centres in the country.

It is to be noted that India has received investment proposals from five global Semicon majors to set up semiconductor fabs and display fabs locally in India, which was revealed at the conference. The proposals received so far are to the tune of $20.5 billion in the greenfield segment of display and semiconductor chip manufacturing.