While India has traditionally had a strong semiconductor design industry base, hardware manufacturing remains elusive
Post Date – 12:45 AM, Sat – 6/3/23
While India has traditionally had a strong semiconductor design industry base, hardware manufacturing remains elusive
India’s ambitious plan to boost mass manufacturing of semiconductor chips appears to have hit a wall. Semiconductor chips are an industry with huge potential amid global shortages. Response to the center’s much-publicized incentives to attract chipmakers has not been encouraging. No wonder the government is now reopening the window for applications for its Rs 76,000 crore semiconductor manufacturing scheme after the first window failed to attract any big names. With a new window that opened on June 1 and runs until December 2024, this response is critical to the growth of the semiconductor industry, which is expected to be worth $63 billion by 2026. The government extended the scheme in September last year to allow uniform financial support of 50% of project costs across technology nodes and semiconductor factories for display manufacturing. When the incentive was first announced in December 2021, it received three proposals from the Vedanta-Foxconn joint venture, ISMC, an international consortium that includes Israel-based Tower Semiconductor and Singapore-based IGSS Ventures. However, due to various reasons, all three of them encountered wind and rain. While Vedanta-Foxconn was unable to find a technology partner, backed by Abu Dhabi’s Next Orbit and Israel’s Tower Semiconductor, ISMC asked the center not to consider its proposal because of the pending merger between Intel and Tower Semiconductor. Singapore-based IGSS Venture’s proposal was shelved after it was found by a government advisory committee to be substandard.
Manufacturing semiconductors domestically is important to India’s vision of becoming an electronics manufacturing hub and eventually reducing imports from abroad, especially China – which remains the industry’s number one destination.
The impact of semiconductors on industries such as automobiles, smartphones, laptops, tablets, consumer durables, gaming consoles and other electronics is ubiquitous. Boosting the development of semiconductor fabs with a set of attractive incentives is now a geopolitical priority. While India has traditionally had a strong semiconductor design industry base, hardware manufacturing has remained elusive. Over the past 15 years, several consortiums have tried unsuccessfully to make chips. Taiwan and China continue to dominate the global market. Chips are made of silicon and are tiny objects that perform many functions, such as powering displays and transmitting data. Integrated circuits, microchips, transistors and electronic sensors are all made of semiconductor materials. They implement key functions such as high-end computing, operation control, data processing, storage, and input-output management. Through incentives, India seeks to reshape supply chains to reduce reliance on China at a time when global chip shortages are affecting production of goods. In the current geopolitical situation, reliable sources of semiconductors and displays are of strategic importance and are key to the security of critical information infrastructure. Any country that doesn’t learn to make semiconductors will fall behind other countries.
