India approves Micron's $2.7 billion chip testing plant amid PM Modi's US visit

Indian cabinet has given the go-ahead for U.S. chipmaker Micron Technology to move on with its $2.7 billion plan for a semiconductor testing and packaging unit as Prime Minister Narendra Modi arrived in the United States. According to the official, who wished to remain anonymous, the cabinet has also approved production-related incentives worth 110 billion rupees ($1.34 billion) for the facility, which is planned to be built in Gujarat.

Throughout Modi's current trip to the United States, an official announcement is anticipated. The source told Reuters that because the incentive package is so large, cabinet approval is required. Even though information about Micron's proposal has previously surfaced, the probable cabinet approval is an important development. Representatives from Micron and the Indian government, including the technology ministry.

PM Modi is set to meet with top executives from well-known American corporations during his tour, which began on Tuesday. These companies include FedEx and MasterCard. He will also be honoured on June 22 at a state banquet held at the White House. The White House is encouraging American semiconductor makers to make investments in India, and Micron Technology's project is in line with those objectives. According to representatives of the U.S. administration, discussions on potential future investments are still ongoing.

U.S. official, President Biden wants to encourage greater economic integration between the U.S. and the greatest democracy in the world while lowering the risks involved with doing business in China for local companies. The amount of American companies considering investing in India has been a source of encouragement, according to a top official in the Biden administration. China claimed in May that the largest memory chip manufacturer in the United States, Micron, had failed a security examination and forbade operators of vital domestic infrastructure from buying its goods. The Biden administration was upset by this decision, but the US Commerce Department would not comment.

The Assembly Testing Marking and Packaging operation, which focuses on testing and packaging semiconductor chips but does not involve chip production, will be built in the city of Sanand, according to a business insider familiar with Micron's plans. At the facility, Micron might manage the purchasing and packaging of chips for customers or offer testing services for chips made by other companies before they are distributed. Although the Micron transaction supports PM Modi's goal of making India a semiconductor hub, the industry source emphasised that real success would require chip manufacturing capabilities.

Earlier this month, three significant businesses, including a joint venture between Foxconn and another company, who had submitted a bid for Indian semiconductor incentives were having difficulties because they lacked a technological partner. The industry insider stated, "The Micron transaction helps realise the ambition, but it is not a game-changer as the crucial component of establishing India as a semiconductor base still exists.