India’s plan for semiconductor production- India’s microchip leap: Now for the hard part

Source: The post India’s plan for semiconductor production has been created, based on the article “India‘s microchip leap: Now for the hard part” published in “Live mints” on 4th March 2024.

UPSC Syllabus Topic: GS Paper 3-Science and technology-Awareness in the fields of IT, Space, Computers, robotics, nano-technology.

News: The article discusses India’s plan to set up three semiconductor foundries with foreign partnerships, including a major project by Tata Electronics and Taiwan’s Powerchip.

What is India’s plan for semiconductor production?

India aims to establish three semiconductor foundries with private sector involvement. A significant partnership involves Tata Electronics and Taiwan’s Powerchip Semiconductor Manufacturing Corporation.

The total investment in these semiconductor projects exceeds 71.5 trillion.

The objective is to create a comprehensive semiconductor ecosystem in India, covering design, fabrication, assembly, testing, marketing, and packaging.

These efforts are driven by the desire for strategic autonomy in semiconductor technology and to reduce reliance on foreign chip suppliers.

What are the potential benefits of India’s plan for semiconductor production?

Establishing a semiconductor ecosystem: The foundries will develop a full value chain from design to packaging.

Strategic autonomy: Reducing dependence on foreign chip suppliers enhances India’s self-sufficiency in key technologies.

Economic boost: The combined investment of over 71.5 trillion is expected to strengthen India’s global economic ranking.

Job creation: The project will generate about 20,000 direct and 60,000 indirect jobs, impacting employment positively.

Technological advancement: By producing chips of 28 nanometres, these foundries will contribute to India’s technological progress, although they are behind the global curve of 3nm chip production.

What are the challenges of India’s plan for semiconductor production?

Limited technological edge: The plants will initially produce 28 nanometre chips, while the global standard is advanced at 3 nanometres.

Modest job creation: The projects are expected to generate 20,000 direct and 60,000 indirect jobs, which may not significantly impact the unemployment crisis.

Skilled labor shortage: Concerns about the availability of adequately trained workers for these specialized operations.

Infrastructure challenges: Questions about the assurance of uninterrupted power and clean water supply, crucial for semiconductor manufacturing.

Geopolitical risks: U.S. export controls and India’s reliance on high-tech imports could affect operations. Additionally, domestic political factors, especially with investments focused in Gujarat, which lacks a strong tech base, present potential business risks.

Way forward

To progress, India should focus on developing more advanced semiconductor technology, addressing the skilled labor gap, ensuring stable infrastructure, and navigating geopolitical challenges. Strengthening partnerships, like the one with Tata Electronics and Taiwan’s Powerchip, is also key to enhancing India’s semiconductor industry.

Question for practice:

Discuss the opportunities and challenges presented by India’s plan to establish semiconductor foundries.