In advance of Prime Minister Narendra Modi’s state visit to the United States, a senior government source said on Tuesday that India’s cabinet has authorized Micron Technology’s $2.7 billion plan for a new semiconductor testing and packaging operation.
The factory, which is slated to be built in Gujarat, the home state of Modi, will receive production-related incentives of 110 billion rupees ($1.34 billion), the Indian official continued. He declined to be identified before a planned statement during Modi’s visit.
India Approves Micron Technology’s $2.7 Billion Investment
Due to the scale of the incentive package, the source added, cabinet approval was necessary. The cabinet had already been informed about Micron’s intention, but it had not been approved.
Requests for comment from representatives of Micron and the Indian government, including the technology ministry, went unanswered.
Modi will meet with the CEOs of several leading American corporations during his visit, which begins on Tuesday. These companies include FedEx and MasterCard. On June 22, Modi will also be welcomed to a state dinner at the White House.
The White House is pressuring American semiconductor companies to invest in India, and discussions about potential future investments are underway, according to US administration officials who spoke to Reuters.
According to a US official, Biden wants domestic businesses to lower the risks associated with conducting business in China while further integrating the American economy with that of the largest democracy in the world.
According to a senior Biden administration source, the White House was “encouraged” by the quantity of US businesses considering investing in India.
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Boosting Semiconductor Testing and Packaging Amidst Geopolitical Strains
The Biden administration was enraged when China announced in May that Micron had failed a security check and prohibited operators of critical domestic infrastructure from buying equipment from the largest memory chipmaker in the United States. The US Department of Commerce declined to respond.
The so-called Assembly Testing Marking and Packaging would reportedly be constructed in the city of Sanand, according to an Indian industry source familiar with Micron’s authorization.
These facilities test and package semiconductor chips rather than making them. Micron may purchase and package chips for clients at the facility, or other companies may send their goods for testing prior to distribution.
The insider went on to say that while Micron’s India facility would support Modi’s goal of turning India into a semiconductor hub, actual production was necessary for real success.
This month, Reuters reported that three large companies, including a joint venture with Foxconn, who submitted bids for Indian semiconductor incentives were having trouble finding a technical partner.
The Micron transaction “helps the vision, but not in a remarkable way,” according to an industry insider, “since still the big piece of the puzzle resides in creating India as a semiconductor base.”
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