Israel's Tower Semiconductor To Set Up Chip Manufacturing Facility In India

Tower Semiconductor tried to set up a chip manufacturing facility in India last year. Now, the Israel-based company has revived its interest in manufacturing chips in the country.

It is worth noting that Tower Semiconductor currently manufactures chipsets for some big tech giants, including Samsung, Panasonic and Intel. Notably, Intel even tried to acquire Tower Semiconductor in 2022 when global manufacturers saw the semiconductor chip shortage easing.

Since this was a major transition, Tower decided to postpone its expansion in India. Regrettably, Intel's plan to acquire the company didn't come to fruition due to regulatory issues.

Tower Semiconductor's plan to set up a facility in Bengaluru

As a result, Tower Semiconductor's plan to set up a chip manufacturing facility in India has been revived. In 2022, Tower Semiconductor said it is prepping to set up a $3 billion (about £2.4 billion) facility in Bengaluru, Karnataka.

The project codenamed ISMC (International Semiconductor Consortium) saw Israel's Tower Semiconductor teaming up with India's Next Orbit Ventures.

There were three applicants, including ISMC for the Government of India's $10 billion (about £8 billion) incentive package for setting up a semiconductor manufacturing plant in the country.

Following its setup, ISMC's Bengaluru facility was expected to offer 1,500 direct jobs as well as 10,000 indirect jobs. Aside from this, it was expected to pave the way for silicon fabrication in India.

Ahead of that, Intel expressed its interest in buying Tower Semiconductor for $5.4 billion (about £4.4 billion). Unsurprisingly, there was a major focus shift in Tower's existing plans after both parties agreed to the deal.

Setting up the Indian manufacturing facility was part of the abovementioned plan. So, India was on the verge of losing one of its major semiconductor projects even before its start.

However, things again took a U-turn after Intel backed out of the deal due to regulatory issues in China. Now, Tower has decided to go back to its original expansion plans in India.

The word on the street is that Reliance Industries is planning to buy Tower Semiconductor. However, both parties have neither confirmed nor denied these reports yet.

Minister of Electronics and IT Rajeev Chandrasekar told ET that the Indian government has invited Tower Semiconductor's CEO Russel C Ellwanger to India to talk about manufacturing chips in the country.

The business model of Tower Semiconductor

So, it is safe to assume that Tower could be gearing up to set up its Bengaluru facility in the coming days. Unlike TSMC, Intel, AMD, Qualcomm and MediaTek, Tower SC's expertise is in manufacturing IC (integrated circuits), CMOS image sensors and storage chips.

The technology used by Tower SC is not as advanced as Qualcomm and Intel, but the company has a reputation for making budget-friendly chips for the global market. Most of these chips have industry-grade applications rather than just consumer electronics.

For comparison, Intel and TSMC can manufacture processors on a 4nm architecture, while Tower SC makes chips in the range of 200 to 300nm architectures. Tower does not make processors for phones and computers.

So, it is safe to say that Tower's Bengaluru facility will not have an impact on India's phone manufacturing. Nevertheless, Tower's Bengaluru facility could play a vital role in India's overall semiconductor journey.

Tech giants like Apple and Xiaomi are currently enjoying massive success through their manufacturing plants in India. As a result, Apple's largest partner in the world, Foxconn, is sparing no effort to double its workforce in the country to increase iPhone production.

It will be interesting to see whether Tower manages to garner similar success in India. Its entry in India could also attract other semiconductor companies to set up their facilities in the country.

In the meantime, India has signed a deal with America's Micron Technology to set up a semiconductor manufacturing facility in Gujarat. Minister of IT, Electronics and Telecom Ashwini Vaishnaw has confirmed that the first Made-in-India chip will arrive by the end of 2024.