PM Modi says India can become hub of Chip-making Industry

What’s in today’s article?

• Why in News?
• Background
• Need for Domestic Manufacturing of Semiconductors
• Challenges Faced by the Semiconductor Industry
• Major Incentives approved by the Cabinet for the Sector
• Performance so Far
• News Summary

 

Why in News?

• Prime Minister Narendra Modi attended the 2^nd edition of the SemiconIndia Conference 2023, held in Gandhinagar, Gujarat.

 

Background

• Semiconductors and displays are the foundation of modern electronics industry.
  • Semiconductors are critical components that power electronics from computers and smartphones to the brake sensors in cars.
• Semiconductors and display manufacturing is a very complex and technology-intensive sector.
• It involves huge capital investments, high risk, long gestation and payback periods, and rapid changes in technology, which require significant and sustained investments.

 

Need for Domestic Manufacturing of Semiconductors

• As India does not produce any semiconductors, the country’s demands are met with imports.
• The demand for semiconductors in India will reportedly reach around USD 100 billion by 2025, up from the current demand of USD 24 billion.
• Also, absence of local manufacturing affected India the most during the lockdown imposed due to the Covid-19 pandemic.
  • During this period, there was a global surge in the demand for electronics
• In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance and are key to the security of critical information infrastructure

 

Challenges Faced by the Semiconductor Industry

• Supply Chain Disruptions –
  • One of the most significant challenges faced by the semiconductor industry in recent times has been supply chain disruptions.
  • This is caused by a combination of factors including the Covid-19 pandemic, the ongoing geopolitical tensions and significant trade disputes which exacerbate the severe chip shortage globally.
  • Dependence should be reduced on the limited number of manufacturing hubs by strengthening domestic capabilities and production at home.
• Technological Complexity & Miniaturization –
  • It’s not a race to the bottom but more of a race to the smallest.
  • The industry is on a relentless pursuit of miniaturization which is considered to be the main driving force behind the industry’s remarkable progress and growth.
  • Moore’s Law, which states that the number of transistors on a chip doubles approximately every two years highlights the pressure to constantly innovate and ensure quality control, yield improvement, and time-to-market.
  • This of course has to be delicately balanced between pushing technological boundaries and ensuring cost-effective and reliable production.
• Talent Shortage & Skill Gap –
  • Another major challenge for the industry is the widening gap between demand for skilled professionals and the availability of qualified individuals.
  • Advancements of semiconductor technologies have come at sometimes breakneck speed and there is serious competition to attract the right talent within the semiconductor industry.

 

Major Incentives approved by the Cabinet for the Sector

• In December 2021, the Central government had approved the comprehensive program for the development of sustainable semiconductor and display ecosystem in the country. This includes:
• India Semiconductor Mission –
  • In order to drive the long-term strategies for developing a sustainable semiconductors and display ecosystem, a specialized and independent “India Semiconductor Mission (ISM)” will be set up.
  • The Mission will be led by global experts in semiconductor and display industry.
  • It will act as the nodal agency for efficient and smooth implementation of the schemes on Semiconductors and Display ecosystem.
• Semiconductor Design Companies –
  • Support will be provided to 100 domestic companies of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), etc.
  • The scheme intends to facilitate the growth of not less than 20 such companies which can achieve turnover of more than Rs. 1500 crore in the coming five years.
• Semiconductor Fabs and Display Fabs –
  • The Scheme for Setting up of Semiconductor Fabs and Display Fabs in India shall extend fiscal support of up to 50% of project cost.
  • Central Government will work closely with State Governments to approve applications for setting up at least two greenfield semiconductor fabs and two display fabs in the country.
• Compound Semiconductors and Semiconductor Packaging –
  • The Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fabs and Semiconductor ATMP / OSAT facilities in India shall extend fiscal support of 30% of capital expenditure to approved units.
  • At least 15 such units of Compound Semiconductors and Semiconductor Packaging are expected to be established with Government support under this scheme.
• Fiscal Support –
  • The Central Government has announced incentives for every part of supply chain including electronic components, sub-assemblies, and finished goods.
  • The Government has committed support of Rs. 2,30,000 crore (USD 30 billion) to position India as global hub for electronics manufacturing with semiconductors as the foundational building block.

 

Performance so Far

• So far, three applicants — a Vedanta-Foxconn joint venture, international consortium ISMC and Singapore-based IGSS Ventures — have been approved for setting up semiconductor fabs.
  • The Vedanta-Foxconn joint venture recently signed an agreement with the Gujarat government for setting up a USD 20 billion semiconductor and display manufacturing plant in the state.
  • However, recently, Foxconn announced that it is no longer a part of the joint venture.
• ISMC, backed by Abu Dhabi-based Next Orbit and Israel’s Tower Semiconductor, and Singapore-based IGSS Ventures are setting up in Karnataka and Tamil Nadu, respectively.
• Vedanta and Elest have submitted applications for setting up display manufacturing.
• SPEL Semiconductor, HCL, Syrma Technology and Valenkani Electronics have registered under the scheme for semiconductor packaging.

    

News Summary

• Prime Minister Narendra Modi attended the 2^nd edition of the SemiconIndia Conference 2023, held in Gandhinagar, Gujarat.
• The SemiconIndia Conference 2023 is being organized by the India Semiconductor Mission in partnership with industry.
• The aim of the conference is to make India a global hub for Semiconductor Design, Manufacturing and Technology Development which will help propel the vision of India Semiconductor Mission.

 

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Q1) Is India import dependent for Semiconductor Manufacturing?

Silicon is the material of choice in the semiconductor industry. There are only two organized units in India, for manufacturing of silicon metals. In India, semiconductors are 100 percent dependent on imports.

 

Q2)  What is an integrated circuit simple definition?

An IC is the fundamental building block of all modern electronic devices. As the name suggests, it's an integrated system of multiple miniaturized and interconnected components embedded into a thin substrate of semiconductor material (usually silicon crystal).

 

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Source: ‘Semiconductors not just our need’: PM Modi pitches India as viable chip hub to global investors | EIDASolutions