5G Technology: India has the right ecosystem in place and has everything required for positioning India as a global semiconductor manufacturing hub. The only thing India does not have is prior manufacturing experience in semiconductors, where global players such as ‘AMD’ and Vedanta come into the picture in collaboration with local investors. This gap can be easily bridged using the know-how and expertise available in the country.”
5G Services Bring Exciting Opportunity for India
Indian telecommunication companies have begun rolling out 5G services in the country. Several global technology companies find this an exciting opportunity to expand their presence here. One of them is the semiconductor giant AMD.
“2021 was the year that everyone remembered of a global chip revolution,” A big turnaround in the chip manufacturing industry. So far 2022 seems likely to be another fruitful year for the semiconductor industry.
India’s robust semiconductor initiatives are going to provide adequate impetus to the Make-in-India agenda. Besides, the ability to produce semiconductor chips locally will allow India to circumvent a likely chip cold war.
Prime Minister Modi Reiterates his commitment towards Make in India Initiative
The semiconductor space has hitherto been a vast, unexplored territory for India. However, the government now wants to place the country firmly on the global semiconductor manufacturing pedestal. Speaking at the Semiconductor Conference 2022, India, Prime Minister Narendra Modi stated that his government is cognizant of the untapped potential in the sector.
“We are committed towards the acceleration and growth of the chip design and manufacturing ecosystem in the country. An ecosystem that is built on the principle of ‘hi-tech, high quality and high reliability, Modi said.
With the right policies in place, incentives for manufacturers, and support from the industry, the Prime Minister believes India could become a global semiconductor manufacturing hub.
While the government seems to be on the right track, does India have the capabilities – the right policies, the technology, the workforce and the right ecosystem to establish itself as a global semiconductor powerhouse?
A timely move
India’s push to establish a semiconductor hub in the country has come at a time when major chip manufacturers are looking to dissociate their supply chains from China. India is poised to benefit from the growing trade and geopolitical tension as China continues to fight the virus with stringent lockdown measures.
Meanwhile, Vedanta and Foxconn‘s recent announcement to establish a fabrication and semiconductor manufacturing facility in Gujarat gave India’s ambitions a major boost. Vedanta will invest around INR 1.54 lakh crore to set up the unit.
Last year, the international semiconductor consortium ISMC announced that it would invest USD 3 billion to set up India’s first and largest semiconductor unit in Karnataka. ISMC signed an agreement with the state government. The unit will be set up in partnership with the Intel-owned Tower semiconductors.
India’s aspiration to become a global semiconductor manufacturing hub is not new. Back in 2005, the country tried to attract semiconductor manufacturing giants to set foot in India; however, unfavourable business conditions and bureaucratic hurdles drove them away. However, now with minimal red-tapism, things are looking bright for taking a dynamic shape.
Today, many countries are trying to establish a semiconductor manufacturing base – countries like Singapore, Malaysia, Japan and even Vietnam joining the race. In addition, countries with established manufacturing hubs like China, South Korea, and Taiwan are trying to grow further in terms of semiconductor manufacturing capability.
While several of these countries, such as the US or Taiwan, have strong prior experience, India’s advantage lies in its vast, bustling market, which many of the other countries, embarking on semiconductors, do not. Besides, India has considerable local demand justifying the volumes required to drive this kind of initiative and a great workforce pool required to drive such an initiative, which many other countries lack. So in that sense, India is placed comfortably compared to many of these countries.
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Today, over 60% of semiconductor production is dominated by Taiwan. It almost has a monopolistic hold regarding the advanced technology nodes, which are used in many electronic devices and even military tech. The ability to produce these advanced technology chips locally will allow India to circumvent a chip cold war.
Manufacturers of Advance Technology Chips will lead the world in future
The world heavily depends upon advanced technology chips strategically required for space, defence, and whatever can affect human lives and hence, manufacturing these advanced chips will not only make India self-reliant but will also keep it in the driving seat. “Access to advanced technologies will always be the deciding factor in determining which country will lead in the future. Therefore, to become a leader or a global power, India must become the leader in advanced technologies and the basic building blocks of what drives all these technologies, i.e., chip manufacturing ability.
Government visionary policies and subsidies
The Government of India in its visionary policies announced the highly acclaimed Potential Linked Plans’ (PLI) scheme called ‘SEMICON’ to provide a sufficient boost to the emerging ‘Chip’ industry in India. Through this scheme, the government plans to spend around INR 76,000 crore in semiconductor production over the next 5-6 years. The government is looking to provide financial assistance to companies that invest in semiconductors, display production, and the design environment with high-end technology.
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The Government of India is on the right track and it understands quite diligently the international ecosystem and interdependencies, whether it is the raw material supply chain, supply and demand, return on investment, and the time needed to get to a point to fill your complete production capabilities with the local demand.
India’s challenges in Semi-Conductor
Today, almost all advanced gadgets available in the market, from consumer electronics to defence electronics – everything requires semiconductor chips in some form or other. However, India’s semiconductor demand is met entirely through imports.
Through the semiconductor mission, the government wants to establish a reliable semiconductor supply chain, including raw materials, speciality, chemicals, gases, and production equipment.
The objective of the mission is to formulate a long-term strategy for developing sustainable semiconductors and a semiconductor design ecosystem in the country.
The government’s proactive initiatives should place India on the driver’s-seat
India is uniquely positioned to be an influential player in the segment owing to its consumer base and skilled technical workforce. The country has the right ecosystem in place and has everything required to position India as a global semiconductor manufacturing hub. The only thing India does not have is prior manufacturing experience in semiconductors, where global players come into the picture in collaboration with local investors such as ‘AMD’ and Vedanta. This gap can be easily bridged using the know-how and expertise available in the country.
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