Karnataka bags Rs 23k crore investment from ISMC for India's first semiconductor plant

India’s first semiconductor fabrication unit is expected to generate more than 1,500 direct jobs and 10,000 indirect jobs

International semiconductor consortium ISMC will invest Rs 22,900 cr ($3 bn) in Karnataka to set up a chip-making plant amid a scramble by states to attract fabs.

Chief Minister Basavaraj Bommai termed the development a "significant agreement" and said it will make the state, a leader in IT/BT and R&D, one of the most sought-after in the field of semiconductor technology.

An analyst told DH that the plant will have a “multiplier effect and will promote investment” in the state.
ISMC is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel's Tower Semiconductor. The company will implement the project over the next 7 years and it will generate more than 1,500 direct jobs and 10,000 indirect jobs, the government said.

Also Read | Vedanta in talks to raise up to $3 billion debt in semiconductors push

Additional Chief Secretary (IT, BT) Dr E V Ramana Reddy and Director of ISMC Ajay Jalan signed a memorandum of understanding in the presence of Bommai.

According to a statement issued by the office of Dr C N Ashwath Narayan, Minister for IT-BT and Higher Education, the ISMC has requested 150 acres of land in Mysuru's Kochanahalli Industrial area.

"Karnataka has signed this major MoU when many other states are competing to draw investments in the semiconductor fab sector," said Bommai in his address.

"The Karnataka government understands that it is not just the concessions or incentives, it is the conducive ecosystem that is needed to draw investors."

He stressed that the state "has the best infrastructure and skilled human resources".

The CM said even though there are "challenges ahead", the MoU will "drive us to turn those challenges into opportunities".

Commenting on the development, Kulraj Ashpnani, Principal, Dhruva Advisors LLP, told DH: “State governments are rolling out red carpets to manufacturers of semiconductor fab units. Given the investment size, a semiconductor fab unit is bound to have a multiplier effect and will promote investment and employment in a state."

Navakanta Bhat, Dean of the Centre for Nano Science and Engineering at the Indian Institute of Science (IISc), Bengaluru, termed the decision “historic”.

“The announcement by ISMC to set up India’s
first commercial fab in Karnataka is truly historic. The fact that it has happened immediately after the first Semicon India conclave reaffirms the momentum that is building up in the country,” he told DH.

ISMC and Indian conglomerate Vedanta Ltd have applied for Prime Minister Narendra Modi’s $10 billion incentive plan to push companies to set up semiconductor and display operations in India, the government’s next big bet on electronics manufacturing.

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