In a significant development, Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, has declined an invitation from the Indian government to establish a semiconductor manufacturing plant in India. This decision, reported by Digitimes and highlighted in The Economic Times, marks a setback for India’s ambitions to become a global hub for semiconductor manufacturing.
TSMC’s Decision and Its Implications
TSMC’s refusal to set up a plant in India comes at a time when the Indian government is actively seeking to attract major players in the semiconductor industry to bolster its domestic manufacturing capabilities. While the specific reasons for TSMC’s decision were not disclosed, such outcomes often involve considerations like infrastructure, supply chain logistics, talent availability, and geopolitical factors.
This move reflects the ongoing challenges India faces in its efforts to attract major technology investments in the semiconductor sector. TSMC has also declined similar offers from other countries, including Qatar and Singapore, indicating a cautious approach to global expansion.
India’s Alternative Strategy: Partnership with PSMC and Tata Electronics
Following TSMC’s rejection, India turned to Powerchip Semiconductor Manufacturing Corporation (PSMC), which has entered into a partnership with Tata Electronics. Under this deal, PSMC will be responsible for the design and construction of a wafer manufacturing plant and the training of employees, while the Tata Group will handle subsequent operations.
This collaboration aims to build a wafer plant capable of producing up to 50,000 wafers per month by 2026, significantly contributing to India’s semiconductor manufacturing capacity.
India’s Progress in Semiconductor Manufacturing
Despite the setback with TSMC, India continues to make strides in the semiconductor sector:
- The government has approved six chip fabrication facilities, with five additional facilities in advanced construction stages.
- Major players like Tata Electronics, in partnership with PSMC, are investing heavily in new fabs in Gujarat.
- A joint venture between HCL and Foxconn has been established in Uttar Pradesh to set up a semiconductor Outsourced Assembly and Testing (OSAT) unit.
These developments indicate India’s commitment to becoming a significant player in the global semiconductor supply chain.
TSMC’s Global Expansion Focus
TSMC is currently expanding its factories in the United States, Japan, and Germany, primarily due to substantial pressure from major powers and the presence of established semiconductor supply chains in these countries. For instance, TSMC plans to invest $100 billion in the United States to build five additional chip facilities, aiming to reduce reliance on semiconductors made in Asia.
However, TSMC’s expansion into the U.S. has not been without challenges. The company’s Arizona facility incurred a loss of nearly NT$14.3 billion ($441 million) in 2024, highlighting the difficulties of replicating its traditional profitability model in new markets.
Conclusion
TSMC’s decision to decline India’s invitation underscores the complexities and challenges involved in establishing semiconductor manufacturing facilities in new regions. While this represents a setback for India’s aspirations, the country’s proactive approach in partnering with other global players like PSMC and Tata Electronics demonstrates its determination to build a robust semiconductor ecosystem. With continued investments and strategic collaborations, India remains on a path toward becoming a significant player in the global semiconductor industry.