Micron Technology plans US$2B investment in India-based packaging facility after Chinese chip ban

22 Jun 2023 --- Micron Technology is reportedly planning to invest as much as US$2 billion in building a semiconductor packaging factory in India, a move to further diversify its geographic footprint at a time of US tensions with China.

But this week, the US$30-billion US-based semiconductor manufacturer, voiced concerns about India’s tax regime, stating that it throws up “unexpected surprises” and is “not aligned with global Outsourced Semiconductor Assembly and Test practices,” reported Financial Express. 

The company has said that recent changes made in the taxation regime have raised a “cloud of uncertainty” with regard to cost of conducting business and urged the government to relook at taxation for the electronics sector. 

However, the Indian cabinet has already given its approval to the US chipmaker’s plan to invest US$2.7 billion to set up a semiconductor testing and packaging unit in Gujarat, Reuters reported on Tuesday.

The Micron deal would mark a win for Modi’s “Make in India” plans, while offering Washington an opportunity to strengthen key supply chains outside of China after recent bans.US-India relations boost
Prime Minister Narendra Modi arrived in the US yesterday, following an invitation by US President Joe Biden.

The deal would mark a win for Modi’s ambitious “Make in India” plans, while offering Washington an opportunity to strengthen key supply chains outside of China. Removing barriers to technological trade between the two countries is a key part of Modi’s state visit, US national security adviser Jake Sullivan said in New Delhi last week.

Readout of Sullivan’s travel to India furthermore states that he discussed a range of strategic, regional and bilateral issues including steps to advance the strategic technology and defense partnership between the US and India. Along with his Indian counterpart, Sullivan unveiled a roadmap for cooperation at a stakeholder event on the Initiative on Critical and Emerging Technologies.

China bans Micron
The Indian investment would follow a Chinese ban on the use of Micron chips in what Beijing called “critical infrastructure,” a move that cast uncertainty over the status of US chipmakers in the world’s largest semiconductor market. On Friday, Micron pledged to invest US$600 million more in its Chinese plant to create jobs and support the local market.

Earlier this month, Bloomberg reported that Chinese authorities had announced in May that Micron failed a cybersecurity review and warned operators of critical infrastructure in the country against buying Micron’s products.

The Biden administration has voiced concern with the move, saying the ban has no basis in fact, and US officials directly raised it with their Chinese counterparts last week. It was also proclaimed that the US will not tolerate the action but has yet to detail any steps to respond to it.

By Natalie Schwertheim