The Editorial Analysis- India’s Semiconductor Dream

Table of Contents

India’s Semiconductor Dream- Relevance for UPSC Exam

GS Paper 3: Indian Economy– Issues relating to planning, mobilization of resources, growth, development and employment.

India’s Semiconductor Dream- Context

In the backdrop of pandemic-driven fragility of the global supply chain, many countries including India have provided support to the Semiconductor sector.
Importance: semiconductors are at the core of fourth industrial revolution technologies. This is especially important in the context of the current geopolitical dynamics.

India’s Semiconductor Dream- Associated Issues

COVID-19 Impact: The pandemic has brought to the fore the fragility of the global supply chain of semiconductor manufacturing.
Competition from Other Countries: The situation is exacerbated by the overdependence of the world on East Asia for fab manufacturing, the rising price of silicon, and the China-U.S. trade war.

The Editorial Analysis | Winter is Here

India’s Semiconductor Dream- Support by Countries

India: India has approved a $10 billion package to incentivise the manufacturing of semiconductors in the country.
- The government has drawn out a list of incentives to get leading international manufacturers to set up their manufacturing unit in India either by themselves or with the help of a local partner.
USA: The U.S. has announced a $50 billion package to create foundries there.
- Intel is adding two more foundries to its Arizona campus and also developing its own foundry business to compete with chip-makers such as TSMSC and UMC.
- TSMC, which controls 24% of the semiconductor supply chain, is setting up a $12 billion facility in Arizona.
Japan and Germany: Japan and Germany have got TSMC to start specialty technology fabs in their respective countries.

The Editorial Analysis- Limits of Power

India’s Semiconductor Dream- Associated Benefits

Strengthen Design: Getting fab manufacturing will also build on India’s strength in design.
- India has the largest number of chip designers outside of the U.S. who are working on state-of-the-art systems and technologies.
- For example, Karnataka boasts of over 85 fabless chip design houses of various global companies.
The strong expertise of our semiconductor design professionals in EDA (Electronic Design Automation) tools provides solid ground to move towards manufacturing.

India’s Semiconductor Dream- Way Forward

Ensuring Demand within the Country: To create the ecosystem for fab manufacturing, it is important to lock in the demand for semiconductors produced within the country.
- The total demand for semiconductors stands at $24 billion. This is expected to grow to $80-90 billion by 2030.
- It would be ideal to enter into an agreement with the consumers of such semiconductors like automotive manufacturers to ensure that whatever is produced is consumed.
Develop Raw Material Supply Capabilities: 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 give a fillip to the Indian gas, materials, and mines industry and also expand opportunities for semiconductor equipment, spares, and service industry.
Promoting Fab Clustering: It is where key semiconductor supply chains and related businesses are in one place to create backward and forward linkages.
- Fab Clustering would also play a key role in creating an ecosystem for the semiconductor industry.
- Such a site should be chosen purely on the ability of the location to act as a force multiplier for the development of such an ecosystem.
Ensuring women’s participation: A conducive environment needs to be created for women to work night shifts along with zero labour disputes.
Encourage Private Participation: Along with promoting FDI in the sector, India also needs to focus on encouraging Indian manufacturers and start-ups to enter and master complex R&D and manufacturing verticals.
- This will ensure that valuable Intellectual Property is created and owned by Indian companies.
Facilitating the development of Cutting-edge technologies: The semiconductor industry is changing fast as new-age technologies require innovation at the design, material, and process levels.
- We must encourage Indian Engineers to set up their design start-ups with handsome government grants and tax incentives.
- Premier research institutions such as the Indian Institute of Science should also be asked to work aggressively on R&D in chip designing and manufacturing.
- Government must focus on emerging technologies like LiDAR and Phased Array in which incumbents do not have a disproportionate advantage and the entry barrier is low.