 "Why India getting a semiconductor foundry is a big deal")
India’s plans to become a major semiconductor powerhouse got a huge boost on Friday.
The Union Cabinet approved three semiconductor-making projects at a cost of Rs 1.26 lakh crore.
The aim is to make the country self-reliant in the field of semiconductors and cut down on India’s dependence on chips from abroad.
Construction on the three projects will begin within the next 100 days.
“With the Cabinet approval of 3 semiconductor units under the India Semiconductor Mission, we are further strengthening our transformative journey towards technological self-reliance. This will also ensure India emerges as a global hub in semiconductor manufacturing,” Prime Minister Narendra Modi said in a post on X.
“Today the Prime Minister has taken an important decision to set up a semiconductor fab in the country. The first commercial semiconductor fab will be set up by Tata and Powerchip-Taiwan whose plant will be in Dholera,” Ashwini Vaishnaw was quoted as saying by B_usiness Standard._
But what do we know about the projects? And why is it a big deal for India?
Let’s take a closer look:
What do we know?
The three units will be set up under the ‘Development of Semiconductors and Display Manufacturing Ecosystem’ scheme.
The government under this programme provides up to Rs 76,000 crore in funding.
Tata Electronics Pvt Ltd will set up a semiconductor fab in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp at Dholera in Gujarat.
The plant will have a capacity to produce 50,000 wafers per month and will involve an investment of Rs 91,000 crore.
Impact Shorts
More ShortsAccording to Business Standard, a wafer has 5,000 chips.
That comes to three billion chips per year.
Vaishnaw said the Tata plant at Dholera will produce high-performance computer chips with 28 nm technology for electric vehicles (EV), telecom, defence, automotive, consumer electronics, display and power electronics.
The Meanwhile, Tata Semiconductor Assembly and Test Pvt Ltd (TSAT) will set up a semiconductor unit in Morigaon, Assam, at an investment of Rs 27,000 crore.
The unit in Assam will have the capacity to produce 48 million per day for automotive, electric vehicles, consumer electronics, telecom, and mobile phones.
The CG power semiconductor unit will manufacture 15 million chips for consumer, industrial, automotive and power applications.
The third unit will be set up by CG Power, a Mumbai-based firm, in partnership with Renesas Electronics Corp and Stars Microelectronics of Thailand.
This plant will be set up in Gujarat’s Sanand at an investment of Rs 7,600 crore.
Renesas is a leading semiconductor company focussed on specialised chips.
It operates 12 semiconductor facilities and is an important player in microcontrollers, analogue, power, and System-on-chip (SoC)’ products.
According to Moneycontrol, 50 nm, 55 nm and 90 nm chips will also be produced by the units.
Vaishnaw said the three units will generate direct employment of 20,000 advanced technology jobs and about 60,000 indirect jobs.
These units will accelerate employment creation in downstream automotive, electronics manufacturing, telecom manufacturing, industrial manufacturing, and other semiconductor-consuming industries.
Tata Electronics’ partner PSMC, which has six semiconductor foundries in Taiwan, is renowned for its expertise in logic and memory foundry segments.
It will manufacture power management chips for high voltage, high current applications.
TSAT semiconductor is developing indigenous advanced semiconductor packaging technologies including flip chip and ISIP (integrated system in package) technologies.
The cabinet had in June approved a proposal from US-based Micron to set up a semiconductor unit in Sanand, Gujarat.
According to Moneycontrol, the Centre and state government of Gujarat are subsidising 70 per cent of the project’s cost.
Construction of Micron’s Sanand unit is progressing at a rapid pace and a robust semiconductor ecosystem is emerging near the unit, Vaishnaw added.
Why is this a big deal for India?
The approvals are part of the Modi government’s ambitions to make India a chipmaker for the world and cutting reliance on countries like Taiwan.
A piece in Indian Express quoted data from California-based semiconductor lobby organisation SEMI as showing that South Korea, Taiwan and China alone make up 70 per cent of the chip manufacturing market, while the US and Japan account for the rest.
It called the development a ‘big leap’ for India on semiconductors. It noted that previous governments were unable to attract tech giants to India.
It said the timing of the move is also instructive.
“The world faces geopolitical tensions, the relationship between the US and China – two of the most influential countries in the technology value chain – is at an all-time low, and India hopes to assume an ever growing role in the space, with help primarily from government-funded schemes to boost the local industry,” the piece noted.
According to Business Standard, Modi in 2022 had announced his government’s intention to make India a semiconductor powerhouse.
According to Newslaundry, India imports around 80 per cent of its semiconductors.
The piece also said that having a successful semiconductor industry would create jobs.
It quoted a McKinsey report as saying that the global semiconductor market is estimated to touch $1 trillion by 2030.
That’s an increase from $590 billion in 2021.
India’s semiconductor market is also set to jump from$15 billion in 2020 to $110 billion in 2030, the piece noted.
But a piece in Economic Times noted that foundries are costly and take a long time to get going.
It said that a few firms Taiwan Semiconductor Manufacturing Co, Intel, Samsung, Global Foundries, United Microelectronics Corp and Tower have essentially sown up the chips manufacturing market.
The move has indeed been a long time coming.
Pranay Kotasthane, chairperson of the high tech geopolitics program at the Takshashila Institution told CNBC in October 2022 that India ‘has a crucial role to play.’
“India has semiconductor human power. Semiconductor design requires large numbers of skilled engineers and this is where India’s strength lies,” he added.
“Previous attempts in India failed because of apprehensions on these counts,” Kotasthane said referring to uncertainty about government policies and the ease of doing business.
Neil Shah, partner at tech consultancy Counterpoint Research, added, “The track record has been not great but the new government has been heading in the right direction … [with] policies to drive impetus and attract leading semi and fab companies.”
“India’s strength is the huge domestic consumption market when it comes to semiconductors, being the second-largest populous economy in the world,” Shah added.
“Also, India has loads of English speaking engineering talent and [a] cheaper labour force making it cost effective.”
However, myriad challenges remain.
The Indian Express piece noted that India can’t yet match the incentive schemes rolled out by the US and the EU.
This is why India is looking at mature nodes like 28 nm and edge nodes remain out of reach, the piece added.
“TSMC, the most influential and important chip company in the world today, which counts Apple as a customer, is currently making chips with a node size of 3 nanometres. It is unclear how many decades India may take to be able to attract companies such as TSMC that can manufacture chips of such levels of sophistication,” the piece said.
It also added that while India is chock-a-block with design engineers, nabbing talent that can work on factory floors of a chipmaking plant remain rare.
“Although it can be argued that having a foundry will allow engineering students to train at a domestic fabrication facility rather than having to travel to countries like Taiwan and Korea to gain first-hand experience of the process — which could spur more engineers to join the stream in India,” the piece noted.
Chip War author Chris Miller told Moneycontrol, “Building a semiconductor ecosystem requires deep relationships between fabs and customers. The facilities announced today seem likely to integrate well with India’s existing manufacturing ecosystem.
“The key is to ensure that the facilities being built are economically viable and support further development.”
Still, experts have hailed the move.
Sanjay Gupta, chairperson and Ashok Chandak, president, IESA told Business Standard, “The approval of three semiconductor units by the Union Cabinet, with an estimated cost of Rs 1.26 trillion, signifies a watershed moment for India’s semiconductor industry. With construction set to commence within the next 100 days, this initiative underscores India’s commitment to fostering a robust semiconductor manufacturing ecosystem. We are especially proud to note that Tata Electronics and Renesas Electronics, both esteemed members of the India Electronics and Semiconductor Association (IESA), are pivotal players in this endeavour. Their involvement not only demonstrates their dedication to India’s technological advancement but also highlights the pivotal role of IESA in driving industry growth and innovation.”
“Within a very short time, India’s semiconductor mission has achieved four big successes. With these units, the semiconductor ecosystem will get established in India. India already has deep capabilities in chip design. With these units, our country will develop capabilities in chip fabrication. Advanced packaging technologies will be indigenously developed in India with today’s announcement,” Vaishnaw said.
“All three units will start construction within the next 100 days. Northeast will get its first semiconductor unit in Assam. Investment in the Assam unit will be 27,000 crore. Chips produced from here will be used by big automobile companies across the globe. Whenever we used to talk about investment in the North-East, the concept of technological investment was never discussed. This tradition has been changed by PM Modi,” Vaishnaw added.
“It is a remarkable achievement. It is a giant leap. Now, we are targeting to become a major player in the semiconductor value chain by 2029… PM Modi actually wants us to work on a 20 year vision for semiconductors.”
Union minister Rajeev Chandrasekhar also pointed out what a big deal this is.
“Today, investment proposals of more than Rs 2.50 trillion have been received by the Government of India from global semiconductor majors. India is fast becoming a semiconductor nation. Just two years ago, it was not even present in the semiconductor ecosystem of the world,” Chandrasekhar was quoted as saying by Business Standard.
With inputs from agencies
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