Cabinet greenlights Kaynes’ $393.45 million chip facility

The top decision making ministerial body chaired by Prime Minister Narendra Modi has approved a proposal by Mysuru-based Kaynes Semicon Pvt. Ltd to setup an outsourced semiconductor assembly and test (OSAT) unit in Sanand, Gujarat.

The proposed unit will be set up with an investment of ₹3,307 crore (about $393 million), with 50% investment, or ₹1,653 crore, coming from the central government and 30%, or ₹661.4 crore from the Gujarat state government and ₹992.1 crore from Kaynes Technology.

Kaynes had in March shelved its plan to set up an OSAT unit in Telangana, and decided to shift to Gujarat, where Micron Technology and CG Power are setting up their semiconductor facilities.

The capacity of this unit will be 6.3 million chips per day that will be used across industrial, automotive, electric vehicles, consumer electronics, telecom, mobile phones.

The unit will be a part of the government’s program for development of semiconductors and display manufacturing ecosystem, launched in December 2021 with a total outlay of ₹76,000 crore (about $10 billion).

Shares of Kaynes Technology surged over 8% in early trade on Tuesday.

Addressing a press conference in Delhi, IT minister Ashwini Vaishnaw said the Sanand plant will come up in 46 acres.

“The entire ecosystem of materials required like gases and raw materials is emerging. It will have a multiplier effect on the electronics, automobile, appliances and many other industries,” Vaishnaw said.

Before securing cabinet nod, Kaynes SemiCon, a wholly owned subsidiary of Kaynes Technology, last month signed a landmark memorandum of understanding (MoU) with Singapore based Lightspeed Photonics.

Lightspeed Photonics is a fabless system development company, specializing in integrating optical interconnects with processors to create modular compute-interconnect heterogeneous system-in-packages (SiP) under its LightSiP brand.

The technology boosts server scalability by reducing data latency, footprint, and power consumption, while significantly boosting data bandwidth and performance per watt.

India introduced its incentive scheme for semiconductor and display fabs in 2021.

In June last year, the union cabinet approved US chipmaker Micron’s proposal to invest $2.5 billion to set up an assembly, testing, packaging plant at Sanand in Gujarat.

In February this year, three more semiconductor units were approved.

Tata Electronics is setting up a semiconductor fab in Dholera, Gujarat, and one semiconductor unit in Morigaon, Assam. CG Power is also setting up one semiconductor unit in Sanand, Gujarat.