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US memory chip maker Micron Technology has signed a Memorandum of Understanding (MoU) with the Gujarat government, which is being seen as a significant step for India’s semiconductor industry.

Micron, which has signed the MoU to build a $2.75 billion semiconductor assembly and test plant, had announced last week it plans to employ a workforce of 5,000 and create an additional 15,000 community jobs over the next five years.

Along with the details about Micron’s plans, two other big semiconductor announcements were made related to Applied Materials and Lam Research. But Micron’s MoU signing with the state government is now seen as the first step towards Atmanirbhar memory chip making.

India waited for a long time to witness this milestone. It began with Semiconductor Complex Limited (SCL) – the state-owned semiconductor fabrication foundry in Mohali since 1976.

The SCL was initially successful and it produced a number of chips for the Indian market. However, in 1989, a fire broke out at the SCL’s facility and destroyed a large part of the plant.

Even though officials from the Intelligence Bureau visited the SCL to investigate the cause of the terrible incident, no clear information about the cause of the fire was released.

The SCL was able to restart production in 1997, but the plant was outdated and unable to compete with more efficient fabs (manufacturing plants) in other countries. Later, in 2006 it was renamed as Semi-Conductor Laboratory.

But it is hard to ignore that the fire was a devastating setback for India’s semiconductor manufacturing efforts. Separately, it is believed that the SCL had faced a number of bureaucratic hurdles in its history. For example, there was difficulty in getting approvals for new projects.

Additionally, the SCL did not receive the level of support from the government that it needed. Also, there was a lack of skilled manpower needed to support a thriving semiconductor industry that needed initiatives to grow the talent pool, unpredictable changes in policy, which first came in 2007 and higher tax on imported semiconductor wafers.

All these made it difficult for SCL to plan for the future, compete with foreign companies and slowed down its growth. However, SCL is presently doing R&D in the field of microelectronics to address the country’s strategic goals.

The government has decided to invest in this facility to modernise it. In May, it was said the Centre will invest $2 billion in the SCL for research and prototyping.

However, the necessity to become a chip hub was felt during the pandemic, seeing massive growing demands. The government then launched India Semiconductor Mission.

Since then, many companies have been in talks with the government and changes have been made in the programme considering the demand in every sector. So it’s not about making cutting-edge chips anymore, even though in that case Taiwan’s TSMC is an undisputed leader.

Now, it is believed that almost half of the semiconductor sector will be about mature nodes, while the rest of the industry will focus on smaller and cutting-edge nodes.

Since, the Centre has asked applicants to modify their plans and resubmit them, the Vedanta-Foxconn JV apparently submitted a new proposal based on the new guidelines for making simpler and less costly 40-nanometer chips.

Even though India’s semiconductor dream has taken a long time to materialise, with the right policies, measures to grow the talent pool and the involvement of private giants, the manufacturing hub objective can be achieved.