Indian chip-maker Polymatech to invest $1 billion on expansion

Home-grown semiconductor chip maker Polymatech plans to invest $1 billion by 2025 in setting up new units and expanding semiconductor manufacturing capacity, the company’s Founding President Eswara Rao Nandam told DH.

The Chennai-based firm plans to expand its production capacity to 10 billion chips by December 2024 from the current output of 300 million. The company’s current production facility is located in Chennai and it plans to set up two new plants in Krishnagiri district of Tamil Nadu, around 90 km from Bengaluru.

“Our second plant is slated to start in September. The plant is ready, the final civil works are going to happen. Plant 3 will also be in Krishnagiri around 40 km away from plant 2,” Nandam told DH in an interview.

“By December 2023 we will be reaching 2 billion chips. We have already issued purchase orders and machines are expected by the end of November,” he said.

Polymatech makes opto-semiconductor chips that are used mostly in lighting, medical and food sanitisation applications. “The total addressable market for opto-semiconductors is $2.2 trillion by 2030. The current size is around $1.35 trillion,” he said.

He said a substantial portion of Polymatech’s expanded chip manufacturing capacity would be used for the automobile industry. “We have a lot of inquiries from automobile industry. Many companies are approaching us. We will start supplying the automobile industry this year,” he added.

Polymatech’s first plant is located at Oragadam, Sriperumbudur in the suburbs of Chennai, which is the biggest automobile hub in South Asia.

Asked about the government’s support for the semiconductor industry, Nandam said, “Our industry is eligible for 70% capital subsidy - 20% from state and 50% from the centre. However, as a policy, Polymatech has decided not to opt for any subsidies.”

India is heavily dependent on imports to meet the growing demands for chips. In order to give a boost to semiconductor manufacturing in the country Prime Minister Narendra Modi government announced an incentive programme in 2021 with a financial outlay of Rs 76,000 crore.

On import of raw materials for chip manufacturing, Polymatech president said, “We are today dependent on imports for raw materials, but we will become independent in around 18 months.”