Tata Electronics to set-up OSAT worth Rs 40,000 crore in Assam

Government of India is serious about having silicon fabs. The semiconductor industry is pegged to reach $1 trillion revenue by 2030 globally, and India is aiming to become a key trusted and reliable semiconductor value chain player over the next decade.

For the same, the government has announced a financial incentive worth Rs 76,000 crores in December 2021. In June earlier this year, the government has approved Micron's ATMP unit worth $2.7 billion in Gujrat. Other Indian conglomerates including Anil Agarwal-led Vedanta and Hiranandani Group and other few technology groups are also eyeing to venture into semiconductor manufacturing.

Tata Sons Chairman Natarajan Chandrasekaran confirmed the company's plans to venture into the semiconductor business, the company has summited an application for setting up an Outsourced Semiconductor Assembly and Test (OSAT) in Assam with an investment worth Rs 40,000 crore (approximately $4.9 billion) making it one of the largest investments ever proposed in the state.

The development has been confirmed by Himanta Biswa Sarma, chief minister of Assam on social media platform X (formerly Twitter).

Project Details:

Type: Outsourced Semiconductor Assembly and Test (OSAT) facility

Location: Assam, India

Investment: Rs 40,000 crore (approximately $4.9 billion)

Applicant: Tata Electronics Private Limited (TEPL)

Status: Proposal submitted to the Government of India

Tata Group, under Tata Electronics Private Limited (TEPL), a greenfield venture with expertise in manufacturing precision components, will set up an Outsourced Semiconductor Assembly and Test (OSAT). OSAT, also referred to as assembly, testing, marking, and packaging (ATMP) units, play a crucial role in semiconductor manufacturing as they package and test the silicon chips made at the foundries before they are shipped to the market.

For the same, in April this year, Randhir Thakur was appointed as the Chief Executive Officer & Managing Director of Tata Electronics Pvt. Ltd (TEPL). The email query sent to Tata Electronics confirming the development of the OSAT application did not elicit any response.

Significance:

Boost to Electronics Manufacturing: This project has the potential to significantly boost India's electronics manufacturing sector, creating thousands of jobs and contributing to the country's goal of becoming a global electronics hub.

Semiconductor Development: The OSAT facility will play a crucial role in the development of India's domestic semiconductor industry, reducing dependence on imported chips and boosting self-reliance.

Economic Growth: The investment will generate significant economic activity in Assam, leading to infrastructure development and improved quality of life for residents.

The development comes months after the state government of Assam approved the Assam Electronics (Semiconductor, etc.) Policy 2023, where it is competing against three other states - Uttar Pradesh, Gujarat and Orissa - who have also introduced semiconductor state policies.

The challenged is, if Tata has indeed submitted Rs 40,000 crore chip packaging unit (OSAT) proposal, it will have a collateral impact. It may get tougher for smaller applicants to get approval and even if approved, to get orders. Also, Rs 12,000 crore for Micron and Rs 20,000 crore to Tata along with Design Linked Incentives (DLI), half of the Rs 76,000 crore incentive will be over.