The chip-making industry is a highly-concentrated one. The recent disturbances in different parts of the world have led major economies to enter the chip-making sector. India has been investing in domestic semiconductor manufacturing to address its own semiconductor consumption. Domestic consumption is expected to cross $80 billion in 2026. The policy makers aim to establish India as one of the key partners in global semiconductor supply chains.
Chip production is a resource-intensive and expensive process. The chip-making process is complex and highly technology driven, having multiple other steps in the supply chain such as chip-designing, designing software for chips and patenting them through core Intellectual Property rights. It also involves making chip-fabrication machines; setting up fabs or factories; and assembly, testing, marking and packaging.
Just the setting up of one semiconductor fab requires an investment of anywhere between $3 and $7 billion. It requires a lot of investment to support display fabs, packaging and testing facilities, chip design centres and R&D. Chip-making also requires gallons of ultrapure water and uninterrupted supply of power.
India is trying hard to create a successful semiconductor ecosystem. Some of the developments can be named as:
A joint venture of Indian conglomerate Vedanta and electronics manufacturing giant Foxconn have signed an MoU to set up a ₹1,54,000 crore in Gujarat for setting up their semiconductor and display manufacturing facility.
Israel-based International Semiconductor Consortium announced plans to begin construction on India’s first semiconductor fabrication plant as soon as February 2023.
$3 billion plant in Karnataka by the International consortium ISMC (a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor) and a $3.5 billion plant in Tamil Nadu by Singapore’s IGSS Ventures.
Three startups — Vervesemi Microelectronics, Fermionic Design and DV2JS Innovation, selected under the Design Linked Incentive scheme in the semiconductor space.
Taiwan’s Foxconn Technology Group (Hon Hai) is in discussions with the Indian government for setting up a semiconductor plant on its own, and without any government incentives.
India and the US signed a pact on setting up a semiconductor supply chain and innovation partnership, and established a semiconductor ecosystem to enhance public and private efforts to promote industry cooperation in the semiconductor sector. The key theme of the dialogue focused on resilient and secure supply chains.
The desire to expand advanced manufacturing has given the opportunity to India to become a part of the entire electronics supply chain and not just semiconductors.
We appreciate the government efforts in this direction: A private industry-led research centre, India Semiconductor Research Centre, will soon be launched and the semiconductor laboratory is being modernised and pivoted into research fab.
The government announced the launch of the ChipIN Centre at C-DAC India, Bangalore which will act as one-stop centre to provide semiconductor design tools, fab access, virtual prototyping Hw lab access to fabless chip designers.
India has announced a $10 billion dollar production-linked incentive scheme to encourage semiconductor and display manufacturing in the country. It also announced fiscal support for a design-linked initiative scheme to drive global and domestic investment related to design software, IP rights. The government has budgeted Rs. 3,000 crore to the Indian Semiconductor Mission, aimed at fostering the development of the semiconductor and display manufacturing industries.