S. Mohini Ratna, Editor- VARINDIA
In order to drive long-term strategies for developing a sustainable semiconductors and display ecosystem, recently the Indian government has allotted INR 760 billion (>US$10 billion) package to boost semiconductor and display manufacturing.
There is a saying, “You never want to be in a spot where another nation can control a valuable resource that your nation depends on.” And, probably it is one of the main reasons, India seems to be actively supporting the creation of a chip and display manufacturing ecosystem. In total, the government of India has committed a support of $30 billion to position India as global hub for electronics manufacturing with semiconductors as the foundational building block.
The India Semiconductor Mission will be led by global experts in semiconductor and display industry and act as the nodal agency for efficient and smooth implementation of the schemes on Semiconductors and Display ecosystem.
The program aims to provide attractive incentive support to companies / consortia that are engaged in Silicon semiconductor fabs, display fabs, compound semiconductors / silicon photonics / sensors (including MEMS) fabs, semiconductor packaging (ATMP / OSAT), semiconductor design. Incentives worth INR 2.3 trillion (approx. US$30.16 billion) will be available to position India as a global hub for electronics manufacturing.
Semiconductors or chipsets are used in all modern electronic devices and technologies, with a range of applications that range from electronic products and IT hardware to defense technology, industrial electronics, medical electronics, automation (workplace, healthcare, manufacturing etc.), and the Internet of Things (IoT), with this the demand for semiconductors in India is valued at over US$10 billion.
According to the India Electronics and Semiconductor Association (IESA), semiconductor consumption in India was worth US$21 billion in 2019, growing at the rate of 15.1 percent. Research and development in this industry, which includes electronic products and embedded systems, generated about US$2.5 billion in revenue.
We can’t deny the fact that, India lags in the establishment of semiconductor wafer fabrication (FAB) units – due to a weak ecosystem and shortage of resources as compared to more competitive bases like China and Vietnam. As the semiconductor FAB units require huge investments, gallons of water for production, uninterrupted electricity supply, high operating costs, and the need for frequent technology replacement.
As per the Ministry of Electronics and Information Technology (MeitY), R&D capabilities in very large-scale integration (VLSI) and chip design are showcased by the Centre of Excellence in Nanoelectronics at the Indian Institute of Science, Bangalore and the Indian Institute of Technology, Bombay. India is setting up commercial semiconductor wafer fab units and two consortia have initiated work in this regard. The proposed location is Greater Noida in Uttar Pradesh (about 40 kms from New Delhi) and in Prantij in Gujarat (about 50 kms) from Gandhinagar.
India currently imports 100% of its chip requirements and in order to overcome the capital intensive hurdles, the Indian government is actively seeking foreign capital to set up semiconductor manufacturing facilities in the country. Prime Minister Narendra Modi’s government is working on developing a full ecosystem for the chip manufacturing industry and will start taking applications under its incentive scheme from Jan. 1.
India expects at least a dozen semiconductor manufacturers to start setting up local factories in the next 2-3 years after the South Asian nations offered incentives for the sector. The country intends to get involved in several stages of chipmaking, including silicon and display fabs and semiconductor packaging. It will start with fabrication of mature 28nm to 45nm parts and will request a road map from candidate companies for moving to more advanced production techniques over time.
The government will extend financial support of up to 50 per cent of the project cost to firms selected to set up semiconductor and display fabs in India. It will also work closely with states to establish high-tech clusters with requisite infrastructure such as land, semiconductor-grade water, high-quality power, logistics and research ecosystem to house the fabs.
As per sources, Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., the leading producers of the world’s most advanced chips, have shown themselves willing to expand internationally with recent announcements of new fabs in the U.S. and Japan, aided by local government support.
This production-linked incentives (PLI) and capital support scheme comes at a time when industries across sectors, including the auto sector, in India are grappling with massive production cuts due to global chip shortage. India currently imports all chips to meet the demand, which is estimated to reach around $100 billion by 2025 from $24 billion now.
The auto sector reportedly was worst affected by the chip shortage. Around 40 per cent of the components that are used in the cars are electronic and will require a chip to function. Typically, the more features a car has, the more chips are required to control them. According to auto manufacturers, the global chip shortage is all set to impact India for the next 2- 2.5 years.
Finally, any country that does not learn to make wafers (semiconductors) will lag behind others in the days to come. Any economy that does not have control over semiconductors, quality and design and does not have a focus on talent development will not be able to move forward.
Wishing all our esteemed readers Merry Christmas and a very happy, healthy and prosperous New Year 2022.
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