Source: The Dawn of India’s Semiconductor Era (The Diplomat, March 15, 2024)
Forget just being a consumer, India is now determined to become a major player in the global semiconductor game. With a focus on self-sufficiency and a strategic push to build a robust ecosystem, India is attracting big investments and forging key partnerships. But can this ambitious quest overcome challenges and establish India as a reliable force in the chip world?
India’s Role in Global Semiconductor Production
- India’s Strategic Position: India isn’t just watching as semiconductor production shifts globally. With a large electronics market and skilled technical workforce, India is becoming a key player in global technology.
- Building a Semiconductor Ecosystem: India sees the long-term economic and strategic importance of semiconductors. Learning from the disruptions of COVID-19, India is developing a complete semiconductor ecosystem, including research, chipmaking, design, fabrication, and talent development.
- The India Semiconductor Mission (ISM): Since 2021, India has been pursuing the India Semiconductor Mission (ISM). It offers subsidies and a favorable business environment to attract major players. This initiative signals India’s emergence as a reliable supply chain hub amidst global geopolitical tensions.
Impact of ISM Policy Framework
- Attracting Companies and Investments: The ISM policy framework has played a crucial role in enticing companies and investments for chip assembly and fabrication. The central government’s offer of 50 percent capital support to new entrants in various semiconductor fields has generated substantial global interest.
- Incentives for Diverse Semiconductor Fields: The government’s support extends to compound semiconductors, fabrication, assembly, outsourced semiconductor assembly and test, and photonics. These incentives, along with additional perks for establishing infrastructure within industrial clusters, have bolstered India’s semiconductor policy landscape.
- State-Level Initiatives: Gujarat has taken the lead among states by offering an extra 25 percent capital expenditure support. This state-level initiative further enhances the attractiveness of India’s semiconductor policy, demonstrating a collaborative effort to attract investment and promote semiconductor manufacturing within the country.
Recent Cabinet Approvals: Driving Sector Developments
Tata Electronics – PSMC Partnership Approval
- Greenlight for Tata Electronics and PSMC venture.
- PSMC’s fourth 12-inch fabrication plant.
- Focus on manufacturing 28-nanometre chips for various applications.
- Initial goal: 50,000 wafers per month.
- Production of first chips by 2026.
CG Power, Renesas, and Stars Microelectronics Unit Approval
- Greenfield investment of 76 billion rupees.
- Setup for assembly, testing, marking, and packaging.
- Target: up to 15 million chips per day.
- Chips for consumer, industrial, automotive, and power sectors.
Micron’s Assembly Facility in Sanand
- First chipmaker to establish assembly facility in Sanand, Gujarat.
- Manufacturing first “Made in India” memory chips by end of 2024.
Expansion of Samsung Semiconductors India Research
- Samsung Semiconductors India Research expanding its existing base in India.
Fostering RISC-V Ecosystem in India
Introduction of RISC-V Ecosystem
- Open-source instruction set architecture (ISA) for custom processors.
- Aim: Encourage new entrants in fabless chipmaker market.
Addressing Cost Barriers
- RISC-V focuses on cost-effective solutions.
- Counters expenses linked with proprietary ISAs.
Promoting Innovation and Competition
- Encourages innovation and competitive market environment.
Digital India RISC-V Program
- Launch of programme to support RISC-V initiatives.
- Facilitates development of indigenously designed chips.
Indigenous Chip Development
- InCore Semiconductors leading the way.
- Development of SHAKTI chip based on RISC-V ISA.
- Provides open-source alternative to ARM and x86.
India’s Future in the Semiconductor Industry
Emerging as a Global Hub
With ongoing initiatives and future plans, India is poised to become a hub of the global semiconductor ecosystem within a decade. The country’s semiconductor industry is on a steady rise, supported by strategic government policies, international collaborations, and a focus on talent development. These efforts will position India as a reliable and strategic player in the global semiconductor market.
Challenges Ahead
However, several challenges need addressing. Issues such as cost competitiveness, inadequate infrastructure, and talent shortages have hindered semiconductor industries worldwide. For instance, Vietnam faces supply chain dependency on Western chipmakers. To avoid a similar scenario, India must nurture its indigenous market through supportive policies.
Building Indigenous Capabilities
India’s fabless chipmakers have already established business relations with global foundries. By expanding these collaborations, India can strengthen its position in design intellectual property (IP) creation. This approach will reduce dependence on external supply chains and enhance India’s self-reliance in the semiconductor sector.