India to set up a mega semiconductor fabrication facility

Saurabh Gaur, Joint Secretary in the ministry of Electronics & IT said India is going all out to build a world-class semiconductor fabrication facility. The plan is to initially build one mega semiconductor cluster, like Hsinchu in Taiwan or Woodlands Wafer Fab Park in Singapore. Even a year ago, the majority in the industry believed India needn’t be in a hurry to set up a new-age fab. It’s expensive – at least $4-5 billion. Previous attempts to set one up had failed. Globally, there seemed to be enough capacity.

Beforehand chips are in short supply. Every major country is trying to build its own semiconductor capability – because chips are the foundation of today’s digital world, and everyone’s wary of being too dependent on Taiwan, given particularly China’s position in the region. Boston Consulting estimates Taiwan accounts for 92% of the world’s most advanced semiconductor manufacturing capacity.

Gaur said there’s enough economic rationale now for India to build a modern fab. Going by the interest companies like Apple, Samsung, Dell, HP, Acer and Asus have shown in manufacturing their electronic products in India – following the government’s recent production-linked incentive schemes – Gaur estimates India’s share of global electronics manufacturing will rise from 3. 5% now to 10% (or about $300 billion) in 4-5 years, by the time the fab is ready. He said these manufacturing semiconductor components from the India fab to have better control of their supply chains.

There are plans for smaller fabs and chip packaging units, there are attractive incentives for chip design – an area where India is already very strong – and incentives for research in semiconductors. A lot of this is directed towards creating Indian companies in chip design and semiconductor products.

Balajee Sowrirajan, MD of Samsung Semiconductor India R&D Centre, said companies like Samsung, Intel, Qualcomm are all in the midst of these core technologies. All of them have massive R&D centres in India. “We have the right innovation knobs, and we’ve been innovating for many, many years to bring about a fundamental change for the global market. Now, coming closer to home, this is going to be important, if you look at smart cities, smart factories (in India),” he said. The global companies, he said, can also play a big role in collaborating with Indian entrepreneurs to create products for India and the world.