Karnataka closes Rs 22k cr deal to set up semiconductor plant

01 May 2022

International Semiconductor Consortium (ISMC), led by Next Orbit Ventures and Tower Semiconductor as joint venture (JV) partners, signed a Rs 22,900 crore agreement with the Karnataka government to set up a chip-manufacturing plant on 150 acres of land in Kochanahalli Industrial Area in Mysuru.

The state government is installing an Electronics Manufacturing Cluster at Kochanahalli. The semiconductor plant is expected to generate 1,500 high-tech and employment and at least 10,000 ancillary jobs. The plant will significantly boost the industrialisation of the district.

ISMC Director and Next Orbit Founder and Managing Partner Ajay Jalan said that the consortium selected Karnataka for setting up the factory due to water availability, stable power, access to talent, quality of life for talented engineers, and incentive package offered by the state.

Initially, ISMC was planning to set up the plant at Dholera Investment Region in Gujarat, but the state may have lost out due to water. Gujarat also lacks formidable electronic manufacturing and design ecosystem like Karnataka.

Semiconductor manufacturing is water-intensive, which is built in layers on silicon wafers into integrated circuits. After each dozen layers of semiconductors, the silicon wafer is added, which must be rinsed with a massive quantity of water. A great deal of this water is Ultra Pure Water (UPW), which is much purer than drinking water.

Karnataka Rajya Raitha Sangha state president Badagalapura Nagendra told the media that industries in the Mysuru district will harm the environment and that semiconductor manufacturing units require a lot of water. He highlighted that water would be diverted from agriculture to industry.

However, business and industry groups have said that 40% of the water used is recycled.

Chip behemoth Intel reduced its water consumption by over 40% from previous levels due to arid conditions at the site location.

Taiwan Semiconductor Manufacturing Company (TSMC) has undertaken several water conservation efforts, with advances in wastewater treatment at semiconductor plants, resulting in water recycling from 40-70%.

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Also read: Semiconductor manufacturing to install within 2-3 years: IT minister