India key to Micron's global strategy with new ATMP facility

Micron, a leading U.S. memory chipmaker, views India as a key part of its global strategy and long-term growth plans. In addition to ramping up its research and development (R&D) efforts in the country, Micron is making its first major foray into backend semiconductor manufacturing in India with the construction of an Assembly, Testing, Marking, and Packaging (ATMP) facility in Sanand, Gujarat. Sumit Sadana, chief business officer of Micron Technology, tells Fortune India, “The expansion that is happening in India is going to be a major part of our overall footprint, it's a very significant investment ($2.75 billion), and so we are going to obviously be focused on making that successful. We would have to do some pioneering work with the ecosystem, and are huge believers in the long term potential of the country on the manufacturing side.”

India has been aiming to bring in semiconductor manufacturing in the country for over two decades now. While none of the leading semiconductor players including foundries and IDMs are yet to announce their manufacturing plans for India, if any, Micron was the first leading global semiconductor player that had applied for setting up backend semiconductor manufacturing with ATMP in India under the India Semiconductor Programme announced in December 2021. Sadana explains, “We are huge believers in India's long term growth story and potential. A lot of that come into really gather momentum over the last few years, but we expect that growth not just to occur from an economic perspective, lifting the per capita income of the citizens, but also in terms of the extent of consumption of electronics in the economy. The economy is going to get more and more sophisticated in its use of technology over time. And we felt like this was the right time to get in on the ground floor of leveraging not just that growth potential for the future from revenue and customer perspective, but very importantly, from driving the capabilities on the manufacturing side, leveraging the talent that India has, leveraging the resources that the government has made available in terms of incentives, and making a bet on that ecosystem development.”

While the government of India offered 50% incentives for both frontend manufacturing referred as semiconductor fabs and backend manufacturing in form of ATMP and OSAT, Micron has opted to set up an ATMP plant in India. Expanding the rationale behind the decision, Sadana says “the packaging aspect is a really good fit for what India has to offer and what kind of big step we can take in setting up those capabilities in India. If I just step back and look at some of the capabilities that India has, and even the needs that India has in terms of producing a lot of large number of high paying jobs in the manufacturing sector. The backend manufacturing, the ATMP manufacturing that occurs in assembly, packaging and test just ends up producing a much bigger number of jobs than frontend manufacturing, which is heavily automated and heavily capital intensive, and most of those investments go into machines. And so on the ATMP side, a lot of the investment goes into actually headcount costs and hiring large numbers of people.”

Micron’s upcoming ATMP in Sanand in Gujarat will create up to 5,000 new direct Micron jobs and 15,000 community jobs over the next several years. For this, Micron has created partnerships with local institutions and various government universities, across Gujarat and India, which will play a crucial role for the company. These collaborations will enable Micron to introduce advanced courses on Assembly, Testing, Marking, and Packaging (ATMP) and prepare skilled individuals for the semiconductor industry. Currently, Micron’s backend manufacturing capabilities are established in Taiwan, Singapore, Malaysia, China and with the upcoming ATMP, India too would be on the list.

Announced only in June 2023, Micron’s India ATMP will take several years to ramp up. Phase 1, which will include 500,000 square feet of planned cleanroom space, will become operational sometime in 2025. The company expects Phase 2 of the project, which would include construction of a facility similar in scale to Phase 1, to start towards the second half of the decade.

The company hasn’t outlined the percentage of the backend manufacturing that will be diverted to India, considering ramping up the India facility will take several years. Sadana explains, “the whole process is going to take multiple years. And over that time, our mix is going to change quite a bit, because the industry will keep evolving. But the good news is that this particular facility in Gujarat will actually be manufacturing both DRAM and NAND products. So we will bring in wafers for DRAM and NAND and ship out finished products for both of those main categories of products that we manufacture.” Micron, as a company, has roughly a 70-30, split between DRAM and NAND in its revenue, and both of those major product categories are going to be manufactured in India.

Clarifying whether the chips packaged at the Sanand plant are meant for domestic consumption, Sadana says, “right now the whole project has been set up as an export oriented project. So our goal is to service our worldwide customer base by exporting out of India. In the future, there are definitely opportunities to address the local market, and we feel that for India to create that vertical market capability end to end, from within the country is a huge positive.”

Micron Fab in India?

Responding to Fortune India’s query of whether Micron has plans to set up a semiconductor fabrication plant in the country in the long term, Sadana says that US based manufacturing will actually take up Micron’s focus and attention for frontend manufacturing for the next decade. In April this year, Micron announced that the company had signed a non-binding Preliminary Memorandum of Terms (PMT) for $6.1 billion in funding under the CHIPS and Science Act to support planned leading-edge memory manufacturing in Idaho and New York, which will support Micron’s plans to invest approximately $50 billion in gross capex for U.S. domestic leading-edge memory manufacturing through 2030.

He adds, “while frontend Manufacturing (is) always a good thing to try and do, it is obviously more capital intensive, requires even deeper ecosystem support, and has a different set of issues and challenges associated with making that successful.” Having its frontend manufacturing in Taiwan and Japan for DRAM and in Singapore for NAND, Micron is setting up its first U.S. fab focused on leading edge. Plus, it already has an existing fab in Virginia that is more for trailing edge capabilities for automotive and industrial type of products, but a leading edge technology fab is being built in Idaho, in headquarters in Boise. In addition, Micron is also working on the New York project for a megafab.

"Compared to other parts of the semiconductor ecosystem, memory manufacturing is a business of scale, so you cannot have a very splintered footprint of manufacturing. Otherwise you don't get economies of scale. So we have chosen the U.S. as our next location for frontend manufacturing, obviously so for DRAM, along with our existing footprint that will continue to be modernised for both Taiwan and Japan for DRAM. So there isn't an opportunity near term for us to look at frontend manufacturing in any other location till we have gotten these projects to fruition.”

Future projections, Gen AI

Just recently, Micron has delivered a strong finish to fiscal year 2024, with revenue of $7.75 billion versus $6.81 billion for the prior quarter and $4.01 billion for the same period last year.

Micron too is betting on gen AI and recently announced its high bandwidth memory (HBM) product, which is the most critical product for AI servers. “we are making investments to support artificial intelligence (AI)-driven demand, and our manufacturing network is well positioned to execute on these opportunities.” Micron’s recently announced 24GB 8H HBM3E offering industry-leading performance and energy efficiency - will be part of NVIDIA upcoming H200 Tensor Core GPUs. This positions the company at the forefront of the industry, empowering artificial intelligence (AI) solutions with HBM3E’s industry-leading performance and energy efficiency.

Interestingly, Micron’s India R&D has contributed to the development of the HBM as well. “There is definitely high bandwidth memory development happening in India as well, contributing to our global effort on research and development. We have actually got R&D initiatives that are in every single category of our major product line. So we do that for DRAM as well as NAND, and we do that across multiple segments of the market, so high bandwidth memory and DRAM development for the compute data center mobile products that go into the best smartphones in the world.”

Micron commenced its India R&D operations with just a couple of hundreds of people six years ago, and has close to 4,000 people at its Hyderabad R&D site alone. The company also has its R&D talent setup in Bengaluru as well. Across the two R&D sites, engineers work with the architecture and design definition, all the way to design implementation and backend work, as well as the tape out of the designs validation, working with customers on fields so field support, and more, adds Sadana.