India's Hindustan Semiconductor Manufacturing Corp (HSMC) said on Wednesday it would invest up to 4.5 billion dollars to build two chipmaking facilities in a licensing tie-up with leading German chipmaker Infineon Technologies.
Hindustan Semiconductor will use "leading edge" process technology under licence from Infineon Technologies AG in its products, according to a statement by the two companies outlining their signed memorandum of understanding.
The first plant "will require an investment of approximately one billion dollars and will produce chips on eight-inch wafers. The second will be for more advanced 12-inch wafers requiring an investment of 3.2 to 3.5 billion dollars," the statement said.
The agreement between the two companies will "help build a foundation for the production of integrated circuits for mobile phones, identity cards and automotive products in India for the Indian market," the statement said.
Wednesday's announcement came soon after India announced a semiconductor policy providing subsidies and tax breaks for investors setting up chip manufacturing units in India.
India is currently a negligible player in semiconductors and the policy aims to put the country on the global semiconductor map. "This move will further strengthen Infineon's position as a leading player in the Indian semiconductor market where it has been active for ten years," the statement said.