Our Semicon Report Card

Context: 

The Indian Prime Minister Narendra inaugurated a six-day event focusing on semiconductors – Semicon India 2023 in Gandhinagar on July 28, 2023, with an aim to make India a global hub for Semiconductor Design, Manufacturing and Technology Development which will help propel the vision of India Semiconductor Mission.

About Semiconductor:

• It is a material that has electrical conductivity and resistivity between that of a conductor and an insulator. 
• Examples of Semiconductor: Primarily silicon, germanium, gallium arsenide, etc.

Significance of Semiconductors: 

• Semiconductors are essential to almost all sectors of the economy including aerospace, automobiles, communications, clean energy, information technology and medical devices etc. 

India’s Stand in the Semiconductor Market: 

• The Indian semiconductor industry in 2022 was USD 27 Billion, with over 90% being imported.
• The Indian semiconductor market is expected to reach USD 55 Billion by 2026 with its own consumption of semiconductors expected to cross USD 80 billion by 2026 and to USD 110 billion by 2030. 
• Countries exporting semiconductors to India include China, Taiwan, the USA, Japan, etc. 

About SemiconIndia Programme, 2021:

• A programme with a financial outlay of INR 76,000 crore for the development of a sustainable semiconductor and display ecosystem.

Aim: To develop the semiconductor and display manufacturing ecosystem in the country by providing financial support to companies investing in semiconductors, display manufacturing and design ecosystems. 

Schemes Under the Programme:

• Modified Scheme for setting up of Semiconductor Fabs:
  • For attracting large investments for setting up semiconductor wafer fabrication facilities in the country to strengthen the electronics manufacturing ecosystem and help establish a trusted value chain. 
• Modified Scheme for setting up Display Fabs:
  • For attracting large investments for manufacturing display panels in the country to strengthen the electronics manufacturing ecosystem. 
• Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab / Discrete Semiconductors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities in India extend fiscal support of 50% of the Capital Expenditure for setting up of these facilities in India.
• Design Linked Incentive(DLI) Scheme:
  • It offers financial incentives, design infrastructure support across various stages of development and deployment of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked to design. 
• Significance of the Program: 
  • The program will give an impetus to semiconductor and display manufacturing by facilitating capital support and technological collaborations.

About the India Semiconductor Mission (ISM):

• It has been set up as an Independent Business Division within Digital India Corporation. 
• Digital India Corporation is a not-for-profit Company set up by the Ministry of Electronics and Information Technology(MeitY) under Section 8 of the Companies Act 2013.
• Mandate: It has all the administrative and financial powers and is tasked with the responsibility of promoting the Indian Semiconductor ecosystem in manufacturing, packaging and design. 
  • It is also the nodal agency for the Schemes approved under Semicon India Programme. 

Initiative on Critical and Emerging Technologies (iCET): 

• It is a framework agreed upon by India and the U.S. for cooperation on critical and emerging technologies in areas including artificial intelligence, quantum computing, semiconductors and wireless telecommunication.  

Challenges of Semiconductor Manufacturing in India: 

• Lack of skilled workforce:
  • According to a report by the Indian Semiconductor Association, India faces a shortage of around 250,000 skilled workers in the semiconductor industry. 
• Lack of adequate Infrastructure:
  • The industry requires a lot of infrastructure, including reliable power source,  ultra clean water, clean atmosphere and specialized equipment, which can be expensive to set up.
• Divergence of Rules at Union & State Level: 
  • Divergence between Central and State government rule and regulations that can be difficult to navigate.
  • The process of obtaining environmental clearances for semiconductor manufacturing can be time-consuming and complex.
• Capital Intensive Process: 
  • Due to its high risk, long gestation (usually five years)  and payback times and large capital expenditures, semiconductor manufacturing is a complex industry that requires massive and ongoing investments.
• Competition from Other countries: 
  • India faces competition from other countries that have well-established semiconductor industries, such as China, Taiwan, and South Korea.
• Dependence on Imports: 
  • According to IESA, India imports around 80% of its semiconductor requirements, indicating a heavy dependence on imports for raw materials and equipment.

Advantages of Promoting Semiconductor Manufacturing in India:

• Boost Economy: 
  • The semiconductor industry has the potential to contribute significantly to the Indian economy. 
  • It can create job opportunities, increase exports, and attract foreign investment.
• Technological advancement: 
  • It can help India develop cutting-edge technologies in electronics, data processing, automotive etc and enhance its competitiveness in the global market.
• Strategic Importance: 
  • The semiconductor industry has strategic importance in various sectors such as defense, space, and telecommunications. Promoting this industry can help India achieve self-reliance in these critical areas.
• Addressing Digital Divide: 
  • It can play a crucial role in bridging the digital divide in India by providing affordable and accessible technology to the masses.
• Opportunities India Provides: 
  • India offers a huge consumer base for semiconductor products, providing a strong demand driver for the industry.
  • Experience: Chipmaking firms such as Intel and NVIDIA have large facilities in India that are working on design problems.

Way Forward:

• Strengthening Energy Infrastructure: India needs a robust energy infrastructure to provide 24*7 reliable sources of electricity. 
• Building Strategic Partnerships: India’s semiconductor industry will hinge on its ability to navigate geopolitical tensions and ensure the supply of necessary products like rare earth metals. 
• All Stakeholder Approach: India needs to have a collaborative environment to drive in-country semiconductor manufacturing by actively engaging with allied sectors, universities and private players.
• Need to provide Adequate Skills to the Workforce: It would help in industry development and growth and simultaneously will help in job creation.
• Need to work on providing Adequate Infrastructure: It would help in attracting investments and simultaneously result in growth of the sector and the Nation.
• Need for a Common Set of  Rules at Union & State Level: It would help in easing the process of set up of industries and help in creation of a productive hub.

News Source: The Indian Express