Why Assam makes sense for Tata’s semiconductor packaging plant

At the Vibrant Gujarat Summit held in Gift City in January, N. Chandrasekaran, Chairman of Tata Sons, disclosed that the company had identified Dholera in Gujarat as the location for its semiconductor fabrication unit and was on the brink of finalising negotiations. However, for semiconductor testing and packaging, the diversified conglomerate spanning from salt to steel has earmarked Assam. This development was verified by Rajeev Chandrasekhar, Minister of State for the Ministry of Electronics & IT, during his address at the Digital India Future Skills summit at Guwahati University in Assam today. He stated, “Assam is soon to host a Rs 25,000 crore semiconductor packaging plant, a proposal put forth by Tata that is currently under evaluation.”

Also read: Tata’s proposal for setting up an OSAT in Assam to get the green light soon?

But why Assam?

Danish Faruqui, CEO, Fab Economics, a US-based boutique semiconductor Fab/ATP site Greenfield advisory and implementation consultancy firm, told Business Today, “Assam was chosen because it was one of the pioneering states to announce a competitive semiconductor policy - one that competes with likes of Gujarat, Uttar Pradesh and Orissa even though Assam state-level GDP is 5-6x lower than these states. Such high prioritisation of semiconductors via PLI and CLI by Assam has truly set a benchmark for smaller and low GDP states in India and presents a strong commitment by Assam state for semiconductor players.”

Faruqui expresses, in addition from a resources perspective, Assam region benefits from an ample supply of high-quality water that can be turned into UPW suitable for semiconductor sites. In addition, the state of Assam provides a pollution-free environment conducive to expat workers who will be required for the initial phases of semiconductor greenfield project due to the dearth of such talent in India.

Independent semiconductor analyst Arun Mampazhy states there could have been a suggestion from the central government to not just restrict to one cluster and diversity to other geographies in India as well. He also concurs Faruqui’s views that the availability of water might be slightly better in Assam.

Whatever the reason may be for Tata Group’s Tata Electronics to shortlist Assam for chip testing and packaging, Satya Gupta, President, of VLSI society says, “it is great to know that OSAT is coming to Assam. There have been speculations around this and the Minister has confirmed this. Now we have Tata's covering Semiconductor manufacturing from the West to the East. This will help significantly in developing an overall technology ecosystem in Purvodaya.”