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The government has received nine bids, from companies including the Tata Group, Tower Semiconductor and Texas Instruments, for the overhaul of its Semiconductor Laboratory (SCL) in Mohali, said people with knowledge of the development.

The government has earmarked about $1 billion for the modernisation of the 48-year-old facility.

The state-owned plant is the only chip manufacturing unit in India which produces semiconductors for strategic and defence purposes, including for space exploration such as the Chandrayaan mission. “The need for modernisation of SCL is for a strategic purpose,” a senior government official said, adding that it is keen that a local firm gets the mandate since a lot of the work is of national importance.

The Tata Group has been preparing to enter the chip manufacturing segment in India for the past few years.

Its chairman N Chandrasekaran said earlier this month that it will set up a chip manufacturing unit at Dholera soon.
 

Israel’s Tower Semiconductor has a close association with SCL as it had helped the Indian government plan the 180 nanometres chip plant. Tower Semiconductor is also very keen to enter the commercial chip manufacturing segment in India and has been in active discussions with the government while Texas Instruments has significant chip research and development operations in the country.
 

“Once the government decides on the exact nodes that the facility will manufacture, financial bids will be invited from these companies,” said another senior government official. The firm, which will be given the final mandate, may have to partner with a technology firm that has licensing grade semiconductor technology, the official added. 

The Tata Group, Tower Semiconductor and Texas Instruments did not respond to ET’s queries till press time.

At present, the government-run Mohali facility produces chips of 180 nm node size, which have very limited use cases. The ministry of electronics and information technology (MeitY) officials said the goal is to bring the technology of the facility on a par with industry standards of legacy nodes of 65 and 40 nm to start with, before aiming for more cutting-edge nodes.

Founded in 1976, as Semiconductor Complex Limited, the organisation was meant to further India’s ambitions of semiconductor manufacturing. The facility has, however, lagged behind private companies in terms of production as well as technology over the years.

The government therefore earmarked $1 billion for modernisation of the facility and invited expressions of interest from the industry in September last year. The $1 billion fund is part of the government’s $10 billion semiconductor incentive package to set up a semiconductor chip fabrication ecosystem in the country.

“We are hopeful of getting more bids, especially from domestic companies since a lot of the work is of crucial national importance. We are evaluating the current bids including from the Tata Group. A couple of companies working in the defence space have also shown interest,” said one of the officials cited earlier.

SCL does not need to get into the commercial production of chips, the official said, adding, “It has been doing continuous research and development (R&D) work in the past and will continue doing so.”

Satya Gupta, the chief executive of Epic Foundation, a semiconductor-focused not-for-profit advocacy group, however said SCL would benefit by having some commercial focus.

The government will also need to set “definite” commercial and strategic goals for SCL, especially in terms of the revenue the facility can generate commercially, he said.

“Ideally SCL should plan for $50 million revenue in five years, 80% of which should come from commercial operations including skilling and 20% from products for the strategic sector. Based on these goals and product mix, adequate technology, infrastructure and talent should be planned and created,” Gupta said.

In September 2023, the electronics and IT ministry had invited bids for modernisation of the Mohali facility either by transforming it into a research and development centre of excellence or an at-scale manufacturing facility or a combination of both.

In its bid document, the ministry had then said that SCL would continue to fulfil the semiconductor chip demand of government agencies such as the Indian Space Research Organisation.

The ministry had also mandated that the bidder would need to ensure end-to-end set-up and operationalisation of the R&D fab and look at technology transfer, material and equipment supplies, installation, operational testing, commissioning, onsite and offsite skilling of operational manpower and periodic maintenance.

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