In a giant leap for India’s semiconductor manufacturing sector, the Union Cabinet approved, on February 29, the establishment of three semiconductor units with investments of over $15 billion.
On March 13, Prime Minister Narendra Modi laid the foundation stone of these three semiconductor facilities, located in Dholera and Sanand in Gujarat, and Morigaon in Assam. As the demand for semiconductors continues to grow globally, India aspires to be the global leader in chip manufacturing.
Global situation favors India’s semiconductor sector
The global economic scenario and geopolitical situation has created a window of opportunity for India to emerge as a powerhouse in the semiconductor sector.
More than 60% of global production of semiconductors currently sits in Taiwan, South Korea, and China, all of which face geopolitical headwinds. To ensure a seamless supply of something so fundamental to our world today – semiconductors are a part of practically everything we use in our daily lives from cars to phones to laptops to televisions – a diversification is imperative.
From ‘charkha to chips’, India is uniquely positioned not just because it is a large potential market by itself but because its political culture is open, democratic, peaceful and favorable to free enterprise.
The ‘Make in India’ and ‘Digital India’ initiatives, launched by Prime Minister Modi in his first year in office, have contributed seminally in creating an enabling ecosystem for the rise of the semiconductor industry, along with several other industries.
The government of India launched its ambitious $10 billion Semicon India Programme, in December 2021, under the aegis of India Semiconductor Mission, to promote the country’s semiconductor manufacturing ecosystem. Potential manufacturers are now able to tap into upfront financial incentives of up to 50% for semiconductor fabs, display fabs, compound semiconductors, semiconductor packaging, as well as outsourced assembly and testing units, development, and deployment.
It is to be noted that state governments are also offering incentives over and above the 50% from ISM, so the total government incentives may go up to 70-75%.
In 2023, Micron Technology committed to setting up its world-class $2.75 billion assembly and testing plant in Gujarat, which would generate 5000 direct jobs and 15000 jobs for the community. Micron received 50% fiscal support from the India Semiconductor Mission and 20% from the State Government of Gujarat.
The global semiconductor shortages, witnessed in recent years, have highlighted the strategic importance of diversification in semiconductor manufacturing. India is exploring opportunities to leverage this demand by attracting investments from world's leading chip manufacturers.
Accelerating semiconductor manufacturing in India
India is growing its electronic manufacturing sector, with the aim of securing, by 2026, 11% global market share, worth around $300 billion. Recent commitments from international players like Micron, Applied Materials AMD, and Foxconn are poised to accelerate India’s efforts as those companies seek to mitigate risk with a broader geographical supply chain.
American company Micron is setting up its manufacturing plant in Gujarat.
As a backbone of critical industries such as defense, banking, consumer goods, medicine, transport, education, and more, semiconductors are in demand around the globe. Currently the global semiconductor manufacturing revenues stands at over $500 billion. This revenue is expected to rise to more than $1.8 trillion by 2032.
The cost-effective development of semiconductors at a massive scale requires advanced, precision manufacturing. With the Indian Government’s focus on financially boosting semiconductor manufacturing efforts, international companies are now looking to shorten those build timeframes and explore geopolitically secure supply routes.
For India to leverage this unaddressed demand gap to its advantage, the country can focus on establishing a holistic ecosystem that will propel the production of compound semiconductors–110nm, 65nm, and 28nm–in the near future. Once the ecosystem and capabilities have been established, India can start venturing into the highly advanced sub-10nm, (in other words, leading-edge space) manufacturing space.
Leveraging talent ecosystem and R&D capabilities
With initiatives like the National Policy on Electronics (NPE), Production-Linked Incentive (PLI) Scheme, and Modified Special Incentive Package Scheme (M-SIPS), to name a few, the Government of India has been successful in developing an ecosystem for semiconductor manufacturing in India.
The Government is also facilitating a culture of collaboration between industry and academia to encourage advanced research in semiconductor manufacturing.
Many global semiconductor foundries and technology companies are investing heavily in sub-10nm nodes. By adopting the sub-10nm node, India can attract these global players, fostering partnerships, technology transfer, and collaborations that contribute to the country's semiconductor ecosystem. Investment in the sub-10nm node necessitates the development of a highly skilled workforce in semiconductor design, manufacturing, and research. This, in turn, creates job opportunities and contributes to the growth of India's semiconductor industry.
With a focus on investments in semiconductor manufacturing infrastructure, including fabrication facilities (fabs), cleanrooms, and testing facilities, India will be able to leverage this ecosystem for manufacturing other complex memory and storage components. With global partnerships, investments in R&D, and technology transfer and licensing agreements with established semiconductor companies, India can establish state-of-the-art semiconductor manufacturing infrastructure.
Developing expertise in advanced semiconductor nodes, such as sub-10nm, or manufacturing complex memory and storage components will contribute to India's strategic independence in critical technology areas. It will further reduce dependence on imports for advanced semiconductor components, strengthening India’s technological sovereignty.
From Charkha to Chips
The semiconductor industry across the world is poised to witness tremendous growth which provides a major opportunity. With its vast talent pool, stable political environment, and government commitment to the sector, India is attracting increasing attention from international companies.
Creating the right ecosystem and conditions for semiconductor manufacturing is not a simple task which is why few countries in the world have semiconductor fabs, and even fewer make display fabs. The technologies and infrastructure involved are highly complex, constantly evolving, and cautiously controlled. It is a highly capital-intensive industry. The success of the semiconductor industry also depends on producing large volumes, not big margins.
The semiconductor industry will play a pivotal role in shaping India’s journey from Charkha to Chips, towards becoming a global technology powerhouse.
By Dr. Mukesh Aghi & Bharat Kapoor
https://government.economictimes.indiatimes.com/amp/blog/from-charkha-to-chips-india-is-favorably-positioned-to-be-a-global-hub-for-semiconductors/108769241
Comments