IGSS signs up three equity partners for $3.5-bn wafer plant in Tamil Nadu

A Singapore-based consortium led by IGSS Ventures has submitted its semiconductor plant proposal to the government for setting up a special purpose vehicle with three equity partners to build a $3.5 billion plant in Tamil Nadu in two years with a capacity to make 40,000 wafers per month — roughly around 2,000-2,200 chips per wafer.    

IGSS Ventures’ founder and CEO Raj Kumar, who has built numerous fab plants in Singapore, told Business Standard, without revealing the name, that one strategic partner is a global integrated device manufacturer (IDM) which designs and produces its own chips and which is majority-owned in the US.

The other two are a global high tech park company and a global systems company. Kumar added that while IGSS Ventures has signed agreements with the three, it is scouting around for a fourth partner. Talks are on with domestic companies who have shown an interest.

In the agreement, the IDM partner, which will provide them the technology to manufacture 28-55 nanometre (nm) digital and analog chips, has agreed to buy back 20 per cent of the 40,000 wafer capacity.

The high tech park firm, apart from helping to construct the plant for which 300 acres have been earmarked, could set up an ecosystem around the factory for suppliers and users. The special purpose vehicle (SPV) could also later go in for 22 nm chips, although it is work in progress.  

“All three partners have agreed to take minority stakes in the SPV. We also have deals for 40 per cent of the capacity to be bought by our global buyers in silicon photonics, power technology and GAN on silicon chips. 20 per cent is a buy back with the IDM. For the rest, we have to tie up with other global players,” said Kumar.


 

The game plan

1. To make 40,000 wafers per month
2. Strategic IDM partner to buy back 20% of capacity
3. To sell 40% of chips to its global customers  
4. 20-25% of chips will be digital, the rest analog, in the beginning
5. May look at getting into 22 nanometre chips too
6. Domestic market for foundry products may take 5 years to develop once India has many fabless chip design companies

IGSS is one of three players which include Mumbai-based consortium ISMC and Vedanta-Foxconn which have submitted proposals to set up a chip plant under the government’s semiconductor policy which offers incentives of 30-50 per cent of the project cost for setting the plant.

Vedanta-Foxconn announced an MOU to set up its chip and display plant in Gujarat on Wednesday. The projects are still being scrutinized by the government but the clearances are expected to come through soon.      

In the next five years, Kumar said, the company will have to look primarily for global firms to buy from the foundry since India still does not have full chip design fabless players (like Qualcomm) who will design and outsource manufacturing to Indian foundries. 

“Our aim will be to help in making many such Indian design fabless companies who undertake the entire design in the country and get it manufactured from domestic foundries,” said Kumar.  

IGSS is planning to devote around 20-25 per cent of the capacity to digital chips which are mostly 28 nm; the rest will be for making analog chips which have a huge market. The number of analog chips will go up with large numbers of wafers.

Kumar said the proposed plant will have a product line which accounts for nearly 40 per cent of chip node requirements of the world. For building lower nodes below 28 nm, he said the investment could go up to as high as $10 billion eventually.

In analog chips, the most popular is still the 180 nm but now smaller sized chips are being used extensively.  Estimates say that in digital chips, the 28 nm is one of the most popular.  

For some perspective, Kumar pointed out that it took China 30 years to build a chip-making ecosystem. Despite this, even today, it makes only  30-40 per of its chips domestically. The rest are still imported.