Experts say that no fabs globally can operate without equipment from four key suppliers—Applied Materials, ASML, KLA, and Tokyo Electron. With more semiconductor manufacturing units being planned in India, the top toolmakers are also setting their sights on the country.
The world’s second-largest fab toolmaker, Applied Materials, with an annual revenue of $26.52 billion, is planning to establish a manufacturing unit in India. If sources are to be believed, the firm has zeroed in on Tamil Nadu for its ambitious plans. This is also considered to be a China-plus-one strategy, as the company, which recently lost its top spot as the leading semiconductor equipment maker to ASML, depends on China for 43 per cent of its sales, despite restrictions from the United States. The company is also one of the largest semiconductor manufacturers in the world.
This development comes at a time when Applied Materials is looking to establish an advanced AI-enabled technology development centre for semiconductor manufacturing and equipment in Taramani, Chennai, creating 500 jobs. It is not clear whether the company will focus on its core fab tool manufacturing or semiconductor manufacturing in India.
“It is looking at a long-term play in India. The Tamil Nadu centre may be a curtain-raiser. It may enter manufacturing once the Centre comes out with its updated incentives under the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS),” said an industry source aware of the development. The California-based company did not respond to questions from Business Standard on whether it has chosen Chennai for manufacturing in India.
So far, the Union Cabinet has cleared five semiconductor units in India. This includes American company Micron’s ATMP (assembly, testing, marking, and packaging) facility in Gujarat with an investment of $2.75 billion, and India’s first semiconductor fab unit in Dholera (Gujarat) by Tata Electronics Private Limited (TEPL) in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC). The other three units are Tata Semiconductor Assembly and Test Private Ltd (TSAT) in Morigaon (Assam), CG Power’s unit (in partnership with Japan’s Renesas Electronics Corporation and Thailand’s Stars Microelectronics) in Sanand (Gujarat), and Kaynes Semicon’s unit in Sanand.
Applied Materials is reportedly looking at new markets as Beijing has lined up its national policy to establish its own chip supply chains. In 2023, Applied Materials, which was the world’s number one fab toolmaker, was dethroned by Dutch major ASML, which reportedly clocked a revenue of $29.83 billion compared to Applied’s $26.52 billion. The sales of tools to Chinese clients by Applied were affected due to the US export rules introduced in October 2023. According to state policy, Tamil Nadu is offering a capital subsidy of up to 50 per cent of the capex assistance provided by the Centre for semiconductor manufacturing units to be set up in the state. This is in addition to payroll reimbursements for multiple years.
First Published: Sep 08 2024 | 4:54 PM IST
