India’s chip plans to stimulate UPW market (“Global Water Intelligence”)

Published on January 15, 2022


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The country’s plans to create a semiconductor manufacturing industry from scratch will require a stable supply of ultrapure water. The country’s existing domestic supply chain may not be sophisticated enough to meet the requirements.


The Indian government has announced a $10 billion programme to kick-start a domestic semiconductor manufacturing industry in the face of the global shortage – a move that could add impetus to the country’s niche ultrapure water (UPW) sector.


The government move at the end of last year – aimed at reducing dependency on imports amid the global microprocessor drought – has already seen major players like Vedanta and Intel express interest in setting up manufacturing facilities. The government is also engaging at a diplomatic level with Taiwan to negotiate deals with manufacturers TSMC and UMC to set up facilities in India. Vedanta has indicated an investment of $6-8 billion toward setting up manufacturing of semiconductor chips by 2023-24, and is currently in talks with a number of different states.


Semiconductor manufacturing or fabrication units (fabs) require a higher quality of ultrapure water compared to the pharmaceutical and solar cell manufacturing industries that account for the largest part of UPW demand in India at present (see table below). Ravichandran Selvaraj, managing director of industrial water specialist Gradiant India, told GWI:


“The prospects of semiconductor manufacturing coming to India are very bright as major players are looking to expand manufacturing footprint beyond China, and India’s domestic market potential is a big draw for them.”


At present, India’s large electronics market is completely dependent on imported semiconductor chips, as there are no domestic manufacturing facilities. The disruption to supplies of semiconductor chips during the pandemic, exacerbated by the impact of water shortages in key production areas like Taiwan, has pushed the government to seriously consider reducing its import dependency.


It has announced incentives for every part of the electronics value chain, including components, sub-assemblies, and finished goods, but the bulk of the incentives ($7.5 billion) are for the large-scale manufacturing of semiconductors.


The current ultrapure water (UPW) market in India is mainly focused on the needs of pharmaceutical companies, but the market is expected to shift towards the needs of solar cell manufacturing (see GWI April 2021, p23) and semiconductors over the next 2-3 years. Last year’s announcements on solar cell manufacturing have already resulted in more concrete enquiries for water supply, although not all players are sanguine about the potential for international companies.


A senior source at Suez WTS told GWI that even large solar cell manufacturing companies are looking to engage local players for UPW, and the same could extend to semiconductor manufacturers. Adani Solar, for instance, opted to go with domestic systems integrator Membrane India for the water supply element of its expansion project at Mundra, even though it had selected GE Water for the first phase.


“It really depends on the capability of the internal customer teams on who they select as technology partners,” Selvaraj said. “UPW for semiconductors needs consistent performance with resistivity above 18 M-cm, and TOC maintenance below the prescribed level is absolutely critical. Semiconductor companies also won’t have steam available, and so achieving zero liquid discharge for wastewater in this scenario would need advanced membrane and crystallisation technologies.”


The states of Gujarat, Tamil Nadu and Uttar Pradesh are being considered most seriously as locations for semiconductor manufacturing, as a result of their proximity to electronics and automobile manufacturing hubs. Gujarat and Tamil Nadu are among the most arid states in India, and are increasingly expected to lean on desalination to cater for industrial needs. However, the slow pace of development for desalination projects and other related infrastructure could cloud the prospects for an industry that is also considering alternative sites in South East Asia. As an example, four desalination plants in Gujarat with a combined capacity of 270,000m3/d, awarded in late 2019, are still awaiting financial close, and have yet to begin construction