Taiwan-based chip foundry Powerchip Semiconductor Manufacturing Corporation (PSMC) on Thursday signed a definitive agreement with Indian tech manufacturer Tata Electronics in New Delhi to assist in the construction of India’s first 12-inch wafer fab, to be situated in Dholera, Gujarat. The partnership includes transferring mature process technologies and training Indian employees.

Indian Prime Minister Narendra Modi met with PSMC Chairman Frank Huang on the same day, expressing his strong support for the wafer fab collaboration and promising administrative assistance and investment protection for Taiwanese companies operating in India.

Why it matters: India’s first 12-inch wafer fab will enhance the country’s semiconductor manufacturing capabilities and reduce the country’s dependence on imports. The partnership will encourage foreign investment while positioning India as a potential new global semiconductor hub.

Details: PSMC CEO Martin Chu signed the definitive agreement with Tata Electronics CEO Randhir Thakur, while PSMC Chairman Frank Huang was present to witness the event.

• The investment in the construction of India’s first 12-inch wafer fab is expected to reach $11 billion, with a monthly production capacity of 50,000 wafers, according to the agreement. The new fab is expected to create over 20,000 local high-tech jobs, though a specific start date for construction has yet to be determined.
• Huang told Prime Minister Modi during their meeting in New Delhi that the semiconductor manufacturing industry covers thousands of small and medium-sized enterprises, and he hopes the Indian government will create a friendly business environment for Taiwanese companies in India. The chip industry will also benefit from India’s extensive market potential and skilled workforce, Huang added.
• The Indian government will fully support the construction of the 12-inch wafer fab by PSMC and Tata Electronics, Modi responded. The Indian leader added that he hoped PSMC will participate in the development of India’s chip industry, and stated that the Indian government will assist Taiwanese companies in investing and establishing operations in India.
• On the same day, Huang and Chu met with Ashwini Vaishnaw, the Indian Minister of Electronics and Information Technology, who said the Indian government will work towards establishing a  mutually beneficial high-tech ecosystem for both parties.

Context: The 12-inch wafer fab will make use of PSMC’s mature process technology and expects to produce power management chips, display driver chips, microcontrollers, and high-speed logic chips, as revealed by Tata Group in February. The new fab targets chip markets including automotives, computing and data storage, wireless communication, and artificial intelligence.

• As India’s largest technology conglomerate, Tata Group announced in December 2022 its plan to invest $90 billion over the next five years in domestic chip production, aiming  to establish India as a key player in the global semiconductor supply chain, according to Chinese media outlet Icsmart.