India is on the verge of granting approval for a significant investment of $3 billion from American semiconductor firm Micron. The investment aims to establish an outsourced semiconductor assembly and test (OSAT) unit complete with a minimum of four assembly lines, according to insiders cited by ET.

As per sources, the Idaho-based company plans to make an initial investment of approximately $2.5 billion, with the possibility of further investments expected over a span of five years.

It will be the first approval of an OSAT unit, also known as an Assembly Testing Marking and Packaging (ATMP) unit, by the central government. This comes as part of the government's Rs 76,000 crore package to stimulate semiconductor manufacturing in the country.

As per an official familiar with the matter, “There have been several rounds of discussions between the board of directors Micron and government officials. The Micron board has been asked for details of its planned investment, the capacity it wants to create, and the government help it wants so that the process can be expedited.” 

The deadline for accepting proposals in the ATMP/OSATcategory is set to expire in December 2024.

“The committee has really liked the proposal submitted by them (Micron). There are some additional last- minute due diligence being done right now. It is rigorous process as a lot of public money is involved. The proposal is under consideration and may be approved soon,” a senior government official told ET. 

According to the sources, Micron India did not respond to queries regarding the proposed investment details and expedited approval, while sources indicate that the company's decision could be influenced by the partial ban imposed by China.

According to another individual familiar with the situation, “China had imposed some sanctions on Micron by terming it a national security risk. They have about 16 semiconductor fabrication assembly lines in China. So, they started looking at other countries and the talks with India have been the most fruitful so far. They also considered Malaysia but there is a dearth of talent in the country. So, India becomes the natural choice.” 

These recent developments follow closely after the announcement by US National Security Advisor Jake Sullivan, stating the potential for "significant outcomes" in collaboration between India and the US regarding semiconductor supply chains. The official status of the applications has not been officially announced by the government.

Image source: The economic times