German and US Firms Target India OSAT Market Opportunities
German and US semiconductor companies are exploring OSAT opportunities in India, with Infineon and Onsemi leading the way. Strategic partnerships are forming to leverage local investment while addressing market challenges. The Indian government’s semiconductor mission should focus on sound data-driven strategies to enhance local manufacturing capabilities.
Recently, several German and American companies have shown interest in establishing Outsourced Semiconductor Assembly and Test (OSAT) facilities in India. Notable projects include Tata Group’s Rs 27,120 crore facility in Assam, CG Power’s Rs 7,584 crore unit, and Kaynes Technology India’s Rs 3,307 crore project in Gujarat’s Sanand.
Infineon, a leading German semiconductor company, is currently exploring the potential of developing an OSAT presence in India. They recently signed an agreement with CDIL Semiconductors in Mohali to supply bare semiconductor wafers. This partnership is seen as a strategic step towards setting up an OSAT in India, possibly leveraging Infineon’s expertise in power semiconductors and the automobile sector.
Onsemi, formerly known as ON Semiconductor Corporation, is parallelly assessing the OSAT opportunity in India. The company intends to partner with local firms to fund facility setups while providing necessary technical guidance, resulting in a mutually beneficial arrangement. However, no further details have been shared at this time.
Infineon is one of Germany’s largest semiconductor manufacturers, having reported approximately $15 billion in revenue for the 2024 fiscal year and employing around 58,000 staff globally. They emphasized the importance of preparing for future semiconductor demands despite current market challenges.
Onsemi is facing operational challenges which include planned layoffs of 2,400 employees due to restructuring. The company is also pursuing a significant acquisition of Allegro MicroSystems for $6.9 billion to boost new revenue streams.
Experts urge that the Indian Semiconductor Mission (ISM) should rely on data-driven decisions regarding the number of OSAT facilities eligible for subsidies. Initially, OSAT units received 50% fiscal support on capital expenditure, but clarity is needed on ongoing incentives and whether future approvals will maintain this rate.
Analysts recommend prioritizing additional commercial silicon fabs and compound semiconductor fabs over OSATs in India’s second phase of semiconductor policy. This strategy aims to encourage companies like Infineon to invest more heavily in domestic manufacturing capabilities instead of solely focusing on OSATs.
The growing interest of German and US semiconductor firms in India’s OSAT opportunities underscores the country’s strategic importance in the global semiconductor landscape. Both Infineon and Onsemi are evaluating partnerships to leverage local investment and technical expertise, although challenges such as operational restructuring and market conditions remain. Therefore, the Indian Semiconductor Mission must adapt its supports and strategy to boost local manufacturing capacities effectively.
Original Source: m.economictimes.com
