Chipmaking in India

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Context:

The government has approved four semiconductor manufacturing projects that will cost almost Rs 1.5 lakh crore.

Details:

• In an era dominated by technological advancements, semiconductors play a pivotal role in powering everything from smartphones to advanced computing systems.
• Recognizing the strategic importance of semiconductor manufacturing, India is making a substantial push to build its own chipmaking industry, with a $15 billion investment aimed at bolstering self-reliance and reducing dependence on global supply chains.

The semiconductor value chain:

Pre-competitive research comprises 15-20% of the global value chain.

Design comprises 50% of value addition.

Front-end (wafer fabrication) adds 24% value.

Rest of the value is added through back-end (assembly, testing and packaging); electronic design automation (EDA) and core intellectual property (IP) which provide sophisticated software support to design; equipment and tools; and raw materials.

The Importance of Chipmaking

• Semiconductors are the backbone of modern electronic devices, forming the core of computing, telecommunications, and even critical infrastructure.
• The global demand for semiconductors has surged, driven by rapid technological innovation and the growing need for digital transformation across industries.
• However, the COVID-19 pandemic exposed vulnerabilities in global supply chains, leading to severe semiconductor shortages and highlighting the need for localized manufacturing capacities.

India’s $15 Billion Initiative

The Indian government has committed $15 billion towards developing a robust semiconductor ecosystem. This initiative aims to attract global semiconductor manufacturers, foster domestic capabilities, and ensure a steady supply of chips for various industries.

• Incentives and Subsidies:

The government is offering financial incentives and subsidies to attract major global semiconductor players to set up manufacturing units in India.

• • • These incentives cover capital expenditure, research and development, and operational costs.

• Infrastructure Development:

Investment in state-of-the-art infrastructure, including semiconductor fabrication plants (fabs), testing and packaging units, and specialized research facilities, is a key aspect of the initiative.

• • • Developing such infrastructure is critical to creating a conducive environment for semiconductor manufacturing.

• Skill Development:

Building a skilled workforce capable of handling advanced semiconductor technologies is vital.

• • • The initiative includes programs aimed at training engineers, researchers, and technicians in semiconductor design and manufacturing processes.

• Research and Innovation:

Collaboration with leading academic and research institutions is encouraged to foster innovation in semiconductor technology.

• • • This includes investing in cutting-edge research, encouraging patents, and supporting startups in the semiconductor space.

Strategic Objectives

• Reducing Import Dependence:

India currently relies heavily on imports for its semiconductor needs.

• • • Developing domestic manufacturing capabilities will reduce this dependency and enhance national security by ensuring a stable supply of critical components.

• Boosting Economic Growth:

The semiconductor industry has the potential to generate significant economic benefits, including job creation, enhancing technological capabilities, and stimulating related industries such as electronics manufacturing.

• Strengthening Global Position:

By establishing itself as a semiconductor manufacturing hub, India aims to become a key player in the global semiconductor supply chain, attracting investments and fostering international collaborations.

Challenges and Considerations

• High Capital Investment:

Setting up semiconductor fabs requires substantial capital investment and advanced technological expertise.

• • • Ensuring sustained financial commitment and strategic partnerships will be crucial.

• Technological Complexity:

Semiconductor manufacturing involves sophisticated processes and stringent quality controls.

• • • Developing the requisite technological know-how and maintaining high standards will be a major challenge.

• Global Competition:

India will face competition from established semiconductor hubs like Taiwan, South Korea, and China. Differentiating itself through unique value propositions and efficient operations will be essential.

Future outlook:

• The future of chipmaking in India looks promising, with several global semiconductor giants expressing interest in setting up operations in the country.
• Collaborative efforts, continuous innovation, and supportive government policies will be key to realizing the vision of a self-reliant semiconductor industry.
• As India progresses on this path, it stands to gain not only economic and strategic advantages but also a significant position in the evolving global technology landscape.

Conclusion

• India's $15 billion push towards developing a chipmaking industry is a strategic move aimed at enhancing self-reliance, boosting economic growth, and securing a place in the global semiconductor ecosystem.
• While challenges remain, the potential benefits of a robust domestic semiconductor industry are immense.
• With sustained effort and strategic planning, India could emerge as a major player in the global semiconductor landscape, driving innovation and technological advancement.

READ IN DETAIL-

Semiconductor Manufacturing in India

https://indianexpress.com/article/explained/explained-economics/india-15-billion-push-chipmaking-9541416/