Inox Air Products, India’s largest industrial gas producer, is gearing up for a substantial investment ranging from Rs 300-500 crore to establish advanced purification facilities and a robust supply chain for gases crucial in semiconductor fabrication. This strategic move comes amidst a growing surge of interest from semiconductor fabrication companies looking to set up manufacturing units within India in the near future.

Phasing the Investment Strategy

Siddharth Jain, the Managing Director of Inox Air Products, has revealed that this substantial investment will be rolled out in stages. The initial investment is planned to commence on a smaller scale in the current year, with subsequent scaling up in accordance with the burgeoning demand generated by semiconductor fabrication firms. These companies are increasingly eyeing India as an attractive destination for setting up their operations. A critical factor driving this demand is the necessity for around fifty distinct and highly pure gases required in the intricate process of fabricating semiconductor chips. Notably, only eight of these gases are available in raw form within India, with the remaining 42 being imported along with the necessary infrastructure for transportation and storage.

Seizing Semiconductor Manufacturing Opportunities

India’s semiconductor landscape is rapidly evolving, attracting global chipmakers like Micron, who are considering establishing chip assembly, testing, monitoring, and packaging (ATMP) units, along with chip fabrication facilities within the country. This surge in interest necessitates significant investments to bolster the local supply chain for critical gases. Inox Air Products is actively engaging with multiple chip fabrication and ATMP units to explore opportunities in the Indian market.

Purification of Raw Gases

Inox Air Products is not merely focusing on augmenting the supply chain; they are also investing in the purification of raw gases that are presently available in India. This includes gases such as oxygen, nitrogen, argon, helium, nitrous oxide, methane, silane, and ammonia. The aim is to elevate the quality of these gases to ultra-high purity standards, ensuring they meet the stringent requirements of semiconductor fabrication.

Capital Expenditure Estimate

Addressing the financial aspect of this ambitious endeavor, Siddharth Jain specified that the investment is expected to fall within the range of Rs 300 crore to Rs 500 crore, contingent on the smooth execution of the plan. It is worth noting that Inox Air Products had previously unveiled a substantial capital expenditure plan of Rs 3,000 crore for this year. This significant allocation is intended to support the establishment of ten manufacturing facilities, with a target completion date set for the financial year 2024-25 (FY25).

Initial Dependency on Imports

In a pragmatic acknowledgment of the current scenario, Jain highlighted that the first semiconductor fabrication facility in India would still need to rely on imported gases. Consequently, Inox Air Products’ initial investments will predominantly focus on the development of a robust supply chain and infrastructure to facilitate these imports. Given the existing demand volumes, a greenfield investment for manufacturing these specialty gases within the country may not be justified at this juncture.

In conclusion, Inox Air Products’ forward-looking investment plans signify a pivotal step towards bolstering India’s capabilities in the semiconductor industry. By establishing advanced purification facilities and a resilient supply chain for critical gases, they are positioning themselves as a key enabler for the burgeoning semiconductor manufacturing ecosystem in the country. As semiconductor giants increasingly consider India as a prime destination, Inox Air Products aims to play a pivotal role in supporting their operations with a reliable and high-quality source of essential gases.