Micron Chip factory in India
In Indian PM's recent visit to US, India signed a MoU (memorandum of understanding) with Micron for building a chip assembly factory in Indian state of Gujarat. The factory will create 5,000 direct and 15,000 indirect jobs in the state. The cost of factory is pegged at $2.75 Billion out of which Indian Govt will bear 70% of the net cost. This is due to India's subsidy program to nurture semiconductor industry in India as India has lagged far behind the global competitors like US, China, Taiwan, South Korea & Japan. In fact India is not even in the race as of now & previous efforts to nurture semiconductor industry have failed. The project is promoted as the first of its kind to develop first "make in India chips". The factory however, will not really manufacture the chips but only assemble & test the chips as the key part of chip manufacturing process (front end) will not be happening in India.
One of the criticism of the project is that Indian Govt is footing a large part of funding to build the factory while factory will be wholly owned by Micron. Chip manufacturing is unlike any other industry and India has very little to offer to invite global manufacturers to the country. As of now, India doesn't even have any chip making corporation (actually this is a very narrow global space) which can joint venture with global companies. So only incentive India can offer to global chip makers is large subsidy to come and build factories in India. For the chip makers, one of the reason for coming to India is the great restructuring of supply chains of semiconductor industry. The US is "de-risking" the dependence of chips from China and hence looking for alternatives for supply chains. To be sure, this is a complex & lengthy process and it's yet to be seen how US policies will pan out. The chip manufacturing is also highly capital intensive industry and is regarded as most critical in future of global economy as well as national defense areas of superpowers.
US is pouring $280 Billion in aiding high tech manufacturing with direct subsidy of over $50 Billion to domestic chip makers along with other initiatives for Science, Research and development. China is doing the same with $150 Billion to assist its chip industry and EU with $43 Billion for the same purpose. China has leapfrogged in semiconductor industrial expansion just in last 3 years & US is catching up.
My concern is the stalling of Micron project as previous projects failed to materialize for variety of reasons (1, 2).
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