Elusive quest for semiconductor self-sufficiency

Source: The post is based on an article “Elusive quest for semiconductor self-sufficiency” published in Mint on 27^th July 2023.

Syllabus: GS 3 – Indian Economy – Industrial Policy

Relevance: concerns associated with semiconductor industry in India

News: The demand for semiconductors is increasing exponentially. Countries are now focusing on self-reliance for accessing semiconductors due to pandemic-related supply disruptions and geopolitical tensions.

What is the status of semiconductors in India?

India, as a major electronics consumer, imports nearly all of its semiconductor requirements. India has also identified electronics manufacturing as a crucial sector to enhance growth and exports.

However, since its dependence on imports, any disruption in the supply chain will impact India’s growth. Hence, India has been taking efforts to establish semiconductor fabrication unit in India.

What efforts were made by India to establish semiconductor fab units?

In 2006, the Andhra Pradesh government partnered with SemIndia for a $3 billion project, however, the project failed. In 2007, the Indian government tried to attract Intel Corporation, but the company invested in China and Vietnam.

In 2014, two projects, one by JP Associates and the other by Hindustan Semiconductor Manufacturing Corporation, were approved by the Union Cabinet. However, both projects faced obstacles and were eventually dropped.

What are challenges faced by India in the semiconductor industry?

Read Here: Need of Indigenous Semiconductor Manufacturing Facilities in India

What was the outcome of the last efforts taken by India to set up fab units?

The Centre under the PLI scheme, announced up to $10 billion in subsidies or 50% of the project cost, to attract semiconductor fab units in India.

For this, three projects were approved: 1) Vedanta-Foxconn, 2) ISMC consortium with Tower Semiconductors from Israel, and 3) IGSS Ventures from Singapore. However, these projects have experienced limited progress.

For instance, the Vedanta-Foxconn project collapsed. The ISMC project is on hold due to the merger of Tower Semiconductors and Intel, and IGSS is still in search of an Indian partner.

Must Read: Semiconductor manufacturing in India: significance and challenges

What are the efforts being taken by other countries?

The US has enacted the CHIPS Act, providing $280 billion in subsidies for chip research and production. Germany has announced subsidies worth $22 billion to encourage the establishment of fab units.

The European Union has implemented the European Chips Act to enhance semiconductor production, and the UK has unveiled its own semiconductor strategy.

Source: Mint