India’s semiconductor dream

News: Recently, the government has decided to extend the PLI (Production-Linked Incentive) scheme to encourage semiconductor manufacturing in India.

Why countries are focusing more on manufacturing of semiconductors?

One, the overdependence of the world on East Asia for fab manufacturing, rising price of silicon, China-U.S. trade war and the pandemic has exposed the fragility of the global supply chain of semiconductor manufacturing.

Hence, countries are introducing attractive packages to attract more chip manufacturing. For instance, the U.S. has announced a $50 billion package to create foundries.

Two, the current geopolitical dynamics has changed and semiconductors are at the core of fourth industrial revolution technologies.

What steps has been taken in India?

India has approved a $10 billion package to incentivize the manufacturing of semiconductors. The government has drawn out a list of incentives to get leading international manufacturers to set up their manufacturing unit in India.

Also, the India Electronics and Semiconductor Association is exploring the opportunity to start supplying processed raw materials like minerals and gases to the fab and ATMP (Assembly. Testing, Marking, and Packaging) industry.

This will boost the Indian gas, materials and mines industry and also expand opportunities for semiconductor equipment, spares, and service industry.

What is the scope of Fab manufacturing in India?

First, India has the largest number of chip designers outside of the U.S. For example, Karnataka has over 85 fabless chip design houses of various global companies.

Second, the strong expertise of India semiconductor design professionals in EDA (Electronic Design Automation) tools provides solid ground to move towards manufacturing.

Third, the total demand for semiconductors stands at $24 billion and it is expected to grow to $80-90 billion by 2030. But this demand is for different categories of semiconductors. Hence, there will be need to enter into an agreement with the consumers like automotive manufacturers to ensure that whatever is produced is consumed.

What is the way forward?

First, encourage Indian manufacturers and start-ups to enter and master complex R&D and manufacturing verticals to ensure that Intellectual Property is owned by Indian companies.

Second, since the semiconductor industry is changing fast, there is need to encourage Indian engineeers to set up their design start-ups with government grants and tax incentives.

Three, premier research institutions should also be asked to work aggressively on R&D in chip designing and manufacturing. Also, government must focus on emerging technologies like LiDAR and Phased Array where the entry barrier is low to become atmanirbhar.

Four, the availability of semiconductor grade Ultra Pure Water to the extent of 10 MLD per fab is a key requirement. Also, a conducive environment needs to be created for women to work night shifts along with zero labour disputes.

Five, site for Fab clustering should be chosen on the ability of the location to act as a force multiplier for the development of an ecosystem. There is need to ensure high-quality infrastructure along with uninterrupted power availability connected to two different grids to ensure redundancy.

Read more here: https://forumias.com/blog/semiconductor-manufacturing-in-india-explained-pointwise/

Source: This post is based on the article “India’s semiconductor dream” published in The Hindu on 14^th Feb 2022.