Learning from the CHIPS Act of the U.S.

Source: The post is based on the article “Learning from the CHIPS Act of the U.S.” published in The Hindu on 9^th August 2023.

Syllabus: GS 3 – Science & Technology, Industrial Policy

Relevance: comparison between India’s and the US semiconductor policy

News: The United States’ Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (CHIPS Act) has completed one year. The article compares the US semiconductor policy with India’s.

What are the differences between the US and India’s Semiconductor Policy?

Semiconductor Policy

US: The CHIPS Act promotes intergovernmental collaboration and creates four funds for execution. The Department of Commerce oversees the $50 billion CHIPS for America Fund for semiconductor advancement.

Allocations are also designated for specific purposes, such as $2 billion for defense-unique technologies under the Department of Defense.

India: The Ministry of Electronics and Information Technology (MeitY) oversees India’s semiconductor policy. Specific segments like manufacturing, assembly, displays, and compound semiconductors are handled by the independent India Semiconductor Mission (ISM) under MeitY.

Chip design policy is managed by C-DAC, an R&D organization under MeitY. However, to ensure that the semiconductor strategy persists beyond government terms, a whole-of-government approach like to the CHIPS Act is required.

Collaboration

US: Firms applying for funding through the CHIPS Act must present workforce development proposals. A nodal agency, known as the National Semiconductor Technology Center (NSTC), has been established to partner with businesses and educational establishments.

India: MeitY has initiated the Chips2Startup (C2S) initiative, working with more than 100 universities and colleges. Similar to NSTC, C2S seeks to enhance workforce growth by endorsing established high-quality training schemes.

However, in India, many private training centres prepare chip designers outside the conventional university system.

Hence, it is important for C2S to focus on certifying good programmes of universities or private training institutes rather than running them.

Feasibility Assessment Guidelines

US: The CHIPS Act has created a CHIPS Program Office (CPO) to lay down the guidelines for assessing the financial viability of a project. The CPO is hiring Investment Principals and Financial Structuring Directors to catalyse private sector investments.

India: While India has set up feasibility assessment guidelines, transparency improvements are necessary. Regular monthly progress reports on the semiconductor program, published by the government, will enhance confidence and expectation management.

Packaging Research

US: The CHIPS Act allocates $11 billion for research beyond domestic semiconductor manufacturing, focusing on advanced packaging. The National Advanced Packaging Manufacturing Program (NAPMP) is introduced to enhance the U.S.’s strategic position in this area.

India: India’s semiconductor approach lacks a strong focus on advanced manufacturing and packaging research. Hence, India should learn a lesson from the CHIPS Act and invest in research on future technologies.

Must Read: Semiconductor manufacturing in India: significance and challenges

What can be the way ahead?

The CHIPS and Science Act offers a valuable blueprint for semiconductor policy. Hence, India’s strategists should thoroughly assess its strengths and weaknesses and implement relevant aspects in their semiconductor approach.