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The termination of Intel’s $5.4 billion deal to acquire Israeli contract chipmaker Tower Semiconductor raised questions about Karnataka’s semiconductor future as the latter was supposed to play a key role in a fabrication plant. But the fact is that the state’s chip future already went to the stage of uncertainty after the proposal was rejected.

It was reported last year that the International Semiconductor Consortium (ISMC), a joint venture between Next Orbit Ventures of Abu Dhabi and Tower Semiconductor, wanted to set up a semiconductor plant in Karnataka. The official announcement highlighted that the JV was looking forward to investing $3 billion (Rs 22,900 crore) in a 65nm semiconductor fabrication plant.

However, in July, when a top central government official was asked about the status of the semiconductor project, the official confirmed that it was rejected without further mentioning the reason behind it. So, what became clear is before the split between Intel and Tower happened, the bell for the setback had already rang in Karnataka.

Now in terms of the semiconductor ecosystem in the southern state, there have been a few more challenges that industry experts have highlighted. They believe that the operation of a semiconductor facility would need to take into account the water requirements and adopt suitable strategies to lessen the impact on water resources in a state like Karnataka where the water crisis is a serious concern.

In the region, the key factors impacting the process are water sourcing, water recycling and treatment, infrastructure, regulatory environment, supply chain and logistics as well as environmental sustainability. So, as per the experts, careful planning, strategic alliances, and coordination with relevant parties are necessary to address these important issues.

Getting involved with local organisations, governing organisations, and business groups can aid in the establishment of a prosperous semiconductor unit in Karnataka. Additionally, it is believed that addressing other issues like power supply, competition and market dynamics can certainly help overcome the challenges associated with the region.

Additionally, it needs to be highlighted that India is not the only country that is trying to develop a semiconductor ecosystem. Some believe that since other countries, such as China and Taiwan, have already established strong semiconductor industries, Karnataka will need to compete with these countries to attract investment and talent.

To prepare Karnataka for a strong semiconductor ecosystem, experts believe that the government and private sector jointly need to invest in education and training to create a skilled workforce for the semiconductor industry in the state.

Additionally, the state may think of forming partnerships with other countries to share knowledge and resources which can help Karnataka to develop its own semiconductor industry more quickly. Also, it would be a good idea for the government to review its policies to ensure that they are supportive of the semiconductor industry, something for which Gujarat is highly praised.

However, in terms of a broader picture, it was also highlighted by experts that establishing fabs is a different ball game, as they are hard to set up and costly to run. So what any state or for that matter India needs at the moment are Assembly, Testing, Marking and Packaging (ATMP) facilities. They believe that the country can have the most advanced ATMPs, like what is happening in Gujarat, before getting into the fab game.