Semiconductor industry in India

Semiconductor industry in India

Context The Union Cabinet has approved three semiconductor manufacturing units with an investment of Rs 1.26 lakh crore, a significant move to make India a global hub for chip production and enhance the ‘Digital India’ mission.
Introduction As the digital infrastructure expands, establishing a strong semiconductor manufacturing base in India is not just strategic but essential for reducing dependency on imports, boosting the economy, and securing a competitive edge in the global technology arena.
What are semiconductors? Semiconductors operate based on band theory, where the bandgap determines electron movement from the valence to the conduction band, enhancing electrical conductivity. This movement is enabled by doping; N-type doping adds electrons, while P-type creates holes. Key materials like silicon, germanium, and gallium arsenide are essential for semiconductor technology.

Key semiconductor devices include:

  • Diodes: Allow current to flow in one direction and are used in rectifiers and modulators.
  • Transistors: Including BJTs and FETs like MOSFETs and JFETs, these devices amplify or switch electronic signals.
  • Integrated Circuits (ICs): Combine multiple electronic components on a single chip, crucial for modern electronics.
Semiconductor Fabrication Processes The creation of semiconductor devices involves intricate fabrication processes carried out on semiconductor wafers. This includes steps like wafer preparation, deposition, lithography, etching, doping, and metallization. Advanced technologies such as extreme ultraviolet lithography (EUV), FinFET technology, and multi-patterning are employed to achieve increasingly smaller feature sizes and greater device densities.
Applications Across Industries Semiconductors find critical applications in:

·       Electronics: Vital for devices like computers, smartphones, and digital cameras, semiconductors enable information processing, storage, and transmission.

  • Power Electronics: Used in power conversion and motor controls, semiconductor devices like diodes, thyristors, and IGBTs are integral to managing power systems and renewable energy sources.

·       Optoelectronics: In this domain, devices such as LEDs, laser diodes, and photovoltaic cells rely on semiconductors to generate, detect, and manipulate light.
Emerging Trends and Future Directions The semiconductor industry is at the forefront of several emerging trends:

  • Internet of Things (IoT): The surge in IoT devices has escalated the demand for semiconductors that are optimized for low power consumption, high performance, and efficient data processing.
  • Artificial Intelligence (AI): AI technologies demand semiconductors that are tailored for parallel processing and neural network computations.
  • Quantum Computing: This cutting-edge field uses semiconductor-based quantum devices to create quantum bits or qubits, aiming to vastly exceed the computational capabilities of classical computing systems.
Why is there an urgent need to develop the semiconductor manufacturing industry in India? Geopolitical tensions and China’s dominant position in the global electronics supply chain have spurred India’s strategic efforts to reduce its reliance on imports. Establishing semiconductor fabs within the country not only enhances India’s leverage and bargaining power in the supply chain but also bolsters national security by granting control over critical technology.
 

 

 

 

What is the current state of semiconductor manufacturing development in India?

 Semiconductor Fab in Gujarat:

  • Tata Electronics, in collaboration with Taiwan’s Power Chip Semiconductor Manufacturing Corp. (PSMC), is set to launch India’s pioneering semiconductor fabrication plant in Dholera, Gujarat. This facility, involving an investment of Rs 91,000 crore, aims to produce 50,000 wafers monthly. It will specialize in 28 nm technology for high-performance computer chips and power management chips, serving sectors such as electric vehicles, telecom, and consumer electronics.

Semiconductor ATMP Unit in Assam:

  • Tata Semiconductor Assembly and Test Pvt Ltd (TSAT) plans to establish a semiconductor assembly and testing unit in Morigaon, Assam, with a projected investment of Rs 27,000 crore. This unit is designed to produce 48 million chips daily, targeting applications across automotive, electric vehicles, consumer electronics, telecom, and mobile phones.

Semiconductor ATMP Unit in Gujarat:

  • In a joint venture with Renesas Electronics Corp., Japan, and Stars Microelectronics, Thailand, CG Power will set up another semiconductor unit in Sanand, Gujarat. With an investment of Rs 7,600 crore, the facility will focus on producing 15 million chips per day for consumer, industrial, automotive, and power sectors.

Employment and Economic Contributions:

  • The establishment of these semiconductor facilities is expected to create significant economic and employment opportunities. The chip fab scheme alone is projected to provide direct employment for 26,000 individuals and indirectly support nearly 100,000 jobs. Together, these units are anticipated to generate around 20,000 high-tech job opportunities and 60,000 indirect positions, thereby fostering job creation in associated downstream industries and boosting local economies.
Overview of the Semiconductor Industry in India
  • Current Status and Future Projections: The semiconductor industry in India is experiencing rapid growth. As reported by the India Electronics and Semiconductor Association (IESA), semiconductor consumption reached $21 billion in 2019, with an annual growth rate of 15.1%. Forecasts suggest this figure will rise to over $80 billion by 2026 and reach $110 billion by 2030.
  • Global Position and Competitive Landscape: India is part of a global market predominantly led by the USA, Taiwan, South Korea, Japan, the Netherlands, and increasingly, Germany. However, it faces stiff competition from established markets like China and Vietnam, which currently have more robust semiconductor manufacturing ecosystems.
Strategic Focus and National Initiatives: India’s strategy in the semiconductor industry emphasizes its strengths in IT design and R&D. The country harnesses its skilled workforce of R&D engineers to excel in semiconductor research, design, and innovation.

  • India Semiconductor Mission (ISM): Launched in 2021 with a funding allocation of Rs 76,000 crore from the Ministry of Electronics and IT (MeitY), the ISM is designed to boost India’s position in the global semiconductor market. It aims to establish sustainable manufacturing capabilities, foster a secure microelectronics environment, support startups, promote IP creation, and encourage cutting-edge semiconductor research.

Objectives and Goals of ISM:

The ISM seeks to:

  • Develop a long-term strategy for semiconductor and display manufacturing sustainability.
  • Facilitate a trusted supply chain and adopt secure microelectronics.
  • Support the growth of the Indian semiconductor design industry.
  • Promote local IP generation and enable technology transfers.
  • Leverage economies of scale and stimulate advanced research.
  • Foster national and international collaborations and partnerships.

Implementation Strategies and Financial Schemes: As the nodal agency, ISM plays a crucial role in the efficient implementation of semiconductor programs. It is supported by an advisory board of global experts and engages various stakeholders to attract investments. Financial initiatives include:

  • A total of INR 13 crore disbursed to ISM.
  • Fiscal support of 50% for projects under schemes dedicated to setting up semiconductor and display fabs, and for compound semiconductors, silicon photonics, sensors fab, and semiconductor ATMP facilities.
  • The Semicon India Future Design (DLI) Scheme, which provides incentives for semiconductor design.
  • Modernization of the Semi-Conductor Laboratory in Mohali as a brownfield fab to bolster manufacturing capabilities.
Challenges in India’s Semiconductor Sector 1.     Workforce Challenges: India has a robust pool of design engineers yet lacks adequately skilled workers for semiconductor manufacturing, requiring expertise in device physics and process technology.

2.     Infrastructure Investment: Significant capital is required to develop semiconductor fabrication facilities, with costs to build a new fab exceeding one billion U.S. dollars.

3.     High Capital Costs: Establishing a semiconductor manufacturing unit demands substantial financial investment.

4.     Global Competition: India contends with global competitors, including the US and EU, which offer more attractive incentive schemes.

5.     Supply Chain Vulnerabilities: The semiconductor manufacturing process in India is impacted by supply chain disruptions, price fluctuations, and quality issues, exacerbated by the global chip shortage and international trade tensions.

6.     Research and Development Necessities: Sustained innovation is essential for maintaining competitiveness in the semiconductor sector.

7.     Regulatory Challenges: The sector faces various regulatory hurdles.

8.     Geopolitical Risks: India’s semiconductor industry is susceptible to geopolitical risks.

9.     Policy Stability Concerns: Stability in government policy is a critical issue for the industry.Top of Form
Way forward 1.     Expand Training Programs for skilled semiconductor manufacturing.

2.     Boost Infrastructure Investment to build advanced fabrication facilities.

3.     Enhance Supply Chain Reliability to minimize disruptions.

4.     Increase R&D Funding to drive innovation in semiconductor technologies.

5.     Improve Incentives to attract domestic and international investments.

6.     Streamline Regulatory Frameworks to facilitate easier business operations.

7.     Forge Global Alliances with leading semiconductor markets for technology sharing.

8.     Ensure Policy Stability to attract long-term investments.

9.     Mitigate Geopolitical Risks affecting supply chains and market access.

10.  Support Semiconductor Startups with funding and incubation programs.
Conclusion India’s semiconductor industry stands at a pivotal juncture. With increased investment, improved training, and strengthened global alliances, it has the potential to become a key player in the global semiconductor market, driving technological advancement and economic growth.

 

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