Tata Electronics applies for setting up OSAT worth Rs 40,000 crore in Assam

A year after Tata Sons Chairman Natarajan Chandrasekaran confirmed the company’s plans to venture into the semiconductor business, the company has summited an application for setting up an Outsourced Semiconductor Assembly and Test (OSAT) in Assam with an investment worth Rs 40,000 crore. The development has been confirmed by Himanta Biswa Sarma, chief minister of Assam on social media platform X (formerly Twitter).

Tata Group, under Tata Electronics Private Limited (TEPL), a greenfield venture with expertise in manufacturing precision components, will set up an Outsourced Semiconductor Assembly and Test (OSAT). OSAT, also referred to as assembly, testing, marking, and packaging (ATMP) units, play a crucial role in semiconductor manufacturing as they package and test the silicon chips made at the foundries before they are shipped to the market. For the same, in April this year, Randhir Thakur was appointed as the Chief Executive Officer & Managing Director of Tata Electronics Pvt. Ltd (TEPL). The email query sent to Tata Electronics confirming the development of the OSAT application did not elicit any response.

However, Minister Sarma in a video on X stated, “One good news for us that will change the environment of Assam a lot, Tata Electronics Limited has summited an application before the government of India to set up an Electronic Centre at Jagiroad. They have submitted a proposal to the government of India with an outlay of Rs 40,000 crore. There will be assembly and packaging of semiconductors, and for that after taking to the Assam government, they are satisfied with our talks and they have applied to the government of India.”

He also added that Tata has already told the Assam government that whether there will be an industry or not, the company will need 1000 youth from Assam. “And in anticipation of that industry, they are already going to train 1000 youth so that if the industry is there, they can bring trained manpower and deploy them. We have also been told that it has a lot of potential, it requires a lot of manpower and it is manpower-driven industry.”

The development comes months after the state government of Assam approved the Assam Electronics (Semiconductor, etc.) Policy 2023, where it is competing against three other states – Uttar Pradesh, Gujarat and Orissa – who have also introduced semiconductor state policies.

Believing that Tata’s OSAT plant can change the environment of entrepreneurship in the state, the Assam government is also in touch with the government of India so that the proposal is approved at the earliest. The Minister is hopeful that in the next one - one and a half months, he will definitely hear good news.

Commenting on this development, independent semiconductor analyst Arun Mampazhy says, “If Tata has indeed submitted Rs 40,000 crore chip packaging unit (OSAT) proposal, it will have a collateral impact. It may get tougher for smaller applicants to get approval and even if approved, to get orders. Also, Rs 12,000 crore for Micron and Rs 20,000 crore to Tata along with Design Linked Incentives (DLI), half of the Rs 76,000 crore incentive will be over. Overlay will need to be increased if the government of India is serious about having silicon fabs.”

The semiconductor industry is pegged to reach $1 trillion revenue by 2030 globally, and India is aiming to become a key trusted and reliable semiconductor value chain player over the next decade. For the same, the government has announced a financial incentive worth Rs 76,000 crores in December 2021. In June earlier this year, the government has approved Micron’s ATMP unit worth $2.7 billion in Gujrat. Other Indian conglomerates including Anil Agarwal-led Vedanta and Hiranandani Group are also eyeing to venture into semiconductor manufacturing.

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