After 7 months, Tata signs agreement with Taiwan’s PSMC for Dholera semiconductor fab

Seven months after the Union Cabinet approved the Dholera semiconductor fab, Tata Electronics has finally signed an agreement with Powerchip Semiconductor Manufacturing Corporation (PSMC) of Taiwan. Although discussions between the two companies had been ongoing, the formal agreement was finalised today.

While the agreement does not specify the financial investment from PSMC for the Gujarat fab, the world’s seventh-largest Taiwanese pure-play foundry is expected to provide design and construction expertise for this greenfield facility. In addition to facilitating design and construction, the company will assist in licensing a broad portfolio of technologies and providing engineering support to Tata Electronics for smooth technology transfer between the two. The construction is expected to begin with 28 nanometre (nm) chips.

“This partnership represents a win-win situation, as it positions PSMC and the Taiwanese ecosystem to gain a significant first-mover advantage in the rapidly expanding Indian market while helping India achieve self-reliance in semiconductor manufacturing,” says Frank Huang, chairman of Powerchip Group and CEO of PSMC.

TEPL has reportedly also begun training employees in Taiwan for its semiconductor fab facility, with additional batches expected to travel to the island nation next month. Tata Group plans to train thousands of workers through on-the-job training and skill upgrades.

“We are pleased to partner with PSMC, whose technology and expertise will significantly accelerate our roadmap to pioneer semiconductor manufacturing in India. It will position us to play a key role in the growing semiconductor market to serve global customers,” says N Chandrasekaran, chairman, Tata Sons, responding to the signing today.

With an investment of around ₹91,000 crore ($11 billion), the fab is projected to generate over 20,000 direct skilled jobs with a vision to create more than 1 lakh indirect jobs and achieve a production capacity of up to 50,000 wafers per month. The first inaugural chip is anticipated to roll out by the end of next year.

Fortune India had reported that the AI-enabled facility will leverage advanced factory automation, incorporating data analytics and machine learning to focus on manufacturing power management integrated circuits (ICs), display drivers, microcontrollers (MCUs), and high-performance computing logic. Tata Group has indicated that this fab will serve various markets, including automotive, computing, artificial intelligence, and wireless communications.

The press release also mentioned that Tata Electronics has already engaged with “two design firms from Taiwan” for the fab construction to ensure adherence to global standards of quality, safety, and sustainability. Additionally, Tata Electronics recently signed a memorandum of understanding (MoU) with Tokyo Electron Limited (TEL) for semiconductor equipment infrastructure. In June, the company signed another MoU with US-based Synopsys to accelerate production at the fabrication unit.