India is taking ambitious steps toward the goal of positioning itself as a global hub for semiconductor production. So far, the country has pledged an outstanding $18 billion to turn this ambition into a reality. India recently green-lighted ten semiconductor ventures totaling 1.6 trillion rupees. This strategic shift seeks to change the nation’s topography and build a smart tech role in the global electronics supply chain. India is getting into the race to develop the most advanced chips. Though the challenges are great, the imaginations of the country are set on leveraging its engineering ingenuity and rewarding strategic investments.
The Indian government has just announced a $1 trillion dollar plan. Beyond supporting new fabs, it will pay 50% of project costs for all fabrication units—not just large chips—but provide help with chip testing and packing units. This investment is in pursuit of enticing foreign semiconductor producers to set up shop in the U.S. and boost domestic production. Today, India is one of the world’s top consumers and importers of electronics. It has not done a great job of building a robust local chip industry, resulting in a tiny global supply chain role.
Tata Electronics is an essential partner in this endeavor. The group is constructing a semiconductor fabrication plant in the western state of Gujarat in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp., a joint investment of 910 billion rupees ($11 billion). This fab will manufacture 200mm chips including power management integrated circuits, display drivers and microcontrollers, as well as chips for high-performance computing logic. The creation of these plants is a pivotal step for India to create its own self-sustained semiconductor ecosystem.
Yet, India faces significant challenges that threaten to undermine its aspirations. That demands highly specialized chemical suppliers—suppliers who can and do achieve ultra-high purity standards that go well beyond standard semiconductor fabrication process. In order to deliver for patients and taxpayers, we need to be bold and rethink our ARPA-H playbook and IP paradigm. Newer forms of IP, such as digital content and software, are critical for spurring innovation.
“India may consider updating its IP laws to address new forms of IP, like digital content and software. Of course, improving enforcement mechanisms will go a long way in protecting IP rights.” – Sajai Singh
Achieving this balance has chip designs’ core intellectual property established in areas with strong ecosystems. The U.S. and Singapore are poster children for these hubs. Consequently, local design talent in India is relegated to non-core design testing and validation roles. In addition, they lose the ability to shape the future direction of the core technologies.
“Our competition is with countries like the U.S., Europe, and Taiwan, which not only have strong IP laws but also a more established ecosystem for chip design.” – Sajai Singh
India has a proven talent pool of engineers, both managing and operating at global chip design companies. The country has set itself monumental tasks in constructing its own semiconductor industry. Experts argue that India will require more than a few yards of fabrication plants or assembly facilities. It takes a dynamic ecosystem that inspires sustainable growth and innovation.
“India needs more than a few fabs or ATP facilities (i.e., more than a few ‘shiny objects’). It needs a dynamic and deep and long-term ecosystem.” – Stephen Ezell
The Indian government is using pretty great incentives to lure semiconductor manufacturers to the country. As our experts here at The Avenue explain, there are signs that such investments aren’t here to stay.
“The Indian government has doled out generous incentives to attract semiconductor manufacturers to India,” – Stephen Ezell
“Those sorts of investments aren’t sustainable forever.” – Stephen Ezell
Moreover, while India has sufficient talent in the design space, having established its engineering capabilities since the 1990s, the country still lags behind in manufacturing and testing capabilities, which have only emerged recently.
“India has sufficient talent in design space, because unlike semiconductor manufacturing and testing that has come up in the last 2 years, design has been there since the 1990s.” – Jayanth BR
That vision is giving rise to the promise of outsourced semiconductor assembly and testing (OSAT)—a major opportunity for India. To guarantee that growth is here to stay, access to markets and channels of demand need to be made clear.
“Outsourced semiconductor assembly and testing (OSAT) represents a significant opportunity for India, though clarifying market access and demand channels will be important for sustained growth.” – Sujay Shetty
Looking forward, those in the sector are confident that this year and the next few will be some of the most consequential in pushing India’s semiconductor dreams forward.
“The coming 3-4 years is pivotal for advancing India’s semiconductor goals,” – Sujay Shetty