India and Taiwan Working Towards $7.5 billion Chip Plant Deal

There’s no secret that Taiwan has been looking at expanding its chip production to other nations, with TSMC having agreed to build a plant in Arizona, while also discussing the subject with the EU. Now it looks like a deal is being worked out with India to build further chip plants there, although it’s not clear who the intended manufacturer will be, as TSMC isn’t mentioned in the report by Bloomberg.

However, the piece mentions 5G devices and components for electric cars, which suggests that it might not be a cutting edge node we’re looking at here, but rather something a bit more conservative like 28 or 14 nm. India would make sense in many ways, but the obvious concern once again is water supply, although so far no exact location has been mentioned for the placement of the fab.

Considering that more and more electronics are being manufactured in India, especially for the local market, this move makes a lot of sense, as it could save a lot of money for the foundry and its partners in the long term. On top of that, there are the current tensions between India and China, which has made Chinese products less popular with the local population. There are a few missing factors though, like chip testing and packaging facilities and obviously qualified staff.

India is currently importing some US$24 billion worth of semiconductors and this is estimated to more than quadruple by 2025. The upside for Taiwan is that this could both free up space in local fabs for new customers or additional production for existing customers, but also to make sure that it doesn’t put all its eggs in one basket. With the recent water shortages in Taiwan, it also makes sense to spread out the production globally, even though TSMC has spent a lot of money and resources on improving its water conservation and recycling facilities. Time will tell what comes of the negotiations, but it seems like a mutually beneficial deal.