India’s Status in Semiconductor Chips Manufacturing!
India took the first step in semiconductor chip manufacturing when PM Modi laid the foundation of three manufacturing and assembly facilities at Dholera and Sanand in Gujarat and Morigaon in Assam. Ipso facto, India attempted to set up a factory in 1980, that is, over two decades after Jack Kilby of Texas Instruments invented the first chip in 1958; but it failed to make a mark.
Manufacturing is strategically important for India because dependence on other countries, especially China, or Taiwan, for chips, may jeopardize India's national security.
In reality, India is 60-years behind in semiconductor chip-making technologies. In the 1970s, Intel released its first microprocessor, the 4004, which enabled the creation of ever-smaller and more powerful devices such as debit cards, smart phones, tablets, washing machines, wearable’s to aircraft, and missiles to space rockets.
Let me highlight the global semiconductor market value, which was estimated at $544.78 billion in 2023. It is expected to reach $1,137.57 billion by 2033, growing at a compound annual growth rate (CAGR) of 7.64% from 2024 to 2033. And, whoever controls the supply chains holds the key to being an unrivalled superpower in “Technology Age “civilization.
Yet another key fact to note is that Taiwan, today, holds 68% of advanced foundry capacity, though this is expected to fall to 60% by 2027 as the U.S. expands its domestic capacity. Taiwanese TSMC tops the list with 60% (or nearly $17 billion). Korea follows with 12%, U.S. with12%, China with 8%.
India’s capacity today is ZERO in both categories of manufacturing processes: Normal and Advanced. Advanced manufacturing processes refer to ≤16/14 nanometer (nm) nodes. Advanced semiconductors drive innovation across a wide range of industries. With smaller chips, the processing power and efficiency increases. For example, the phone 15 Pro uses Apple’s first chip manufactured with a 3 nm process, while the Play station 5 uses a 6 nm chip. The rapid technology breakthrough is towards 2 nm.
Chip manufacturing is a highly capital-intensive activity. Rajasthan-based Sahara Semiconductor, which is part of India’s Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), has stated that it will begin the commercial production of the first made-in-India memory chips at its Bhiwadi plant from September or early October 2023.
India’s current initiative – first step – is 28nm or larger chips manufacturing to start production by 2026. Mature processes (28 nm or larger) are cheaper to produce and are used in products that don’t require significant computing power. This includes home appliances and fitness trackers. As on date, there are five company’s – order of over Rs.131,200 crore - in the field: 1) US-based Microns its outsourced semiconductor assembly and testing (OSAT) plant at Sanand in Gujarat at an investment of over Rs.20,000crore; 2) Tata-Power chip Semiconductor Corp in tie up with Taiwan’s Power chip Semiconductor Corp fabrication unit (fab) at Dholera at an investment of about Rs 91,000 crore; 3) Murugappa group’s CG Power-Japan’s Renesas and Thailand’s Stars Microelectronics combine’s is setting up chip assembly, test, marking, and packaging (ATMP) units at Sanand at a cost of Rs.7,600 crore; 4) Tata group’s outsourced OSAT unit at Morigaon in Assam at a cost of Rs.7,600 crore; and 5) Kaynes is moving OSAT unit from Telangana to Gujarat with an investment of Rs 5,000 crore at Sanand, Gujarat. Also undertakes advanced packaging in co-package optics (CPO) in the area of silicon photonics for which it has entered into an agreement with Mixx Technologies.
The joint venture with Tata Group is set to commence with the production of 28-nanometer chips, and to move down till22-nm. Indian engineers are going to be trained in Taiwan on fabs that take time. As per official sources, India will try to get two-three more such fabs and/or at least four or five more fab stand many more ATMP units in the next five years. At least eight states are working very seriously for their future projects after seeing the success of the past four projects. Meanwhile, the Ministry of Electronics and IT has plans to spend US$1.25-US$1.30 billion to modernize and upgrade its semiconductor laboratory (SCL) in Mohall.
Yet another key factor to know is the various steps in the semiconductor value chain. There are seven differentiated activities to include: Pre-competitive research comprises 15-20% of the global value chain; Design comprises 50% of value addition; Front-end (wafer fabrication) adds 24% value; back-end (assembly, testing and packaging); electronic design automation (EDA)and core intellectual property (IP) which provide sophisticated software support to design; equipment and tools; and raw materials.
Semiconductor chips are made from silicon, a common chemical element found in sand. Silicon is semiconductor, which means its electrical conductivity falls somewhere between metals like copper and insulators like glass. A semiconductor manufacturing unit, called fab, is highly capital and labor-intensive enterprise and is subject to volatility in demand. That's why decades ago, Western semiconductor manufacturers outsourced actual making of chips to China and Taiwan due to lower labor costs and incentives while they themselves focused on design and innovation.
Initially, the US followed the integrated device manufacturer model, where all the activities (design, fabrication and assembly) were done by one company. But slowly fabrication and assembly were outsourced to China and Taiwan. Now, the US dominates design, EDA and core IP.
India’s current initiative of fab and OSAT is viewed as the first step. Already plans and initiatives are being taken to cover all steps of the semiconductor chip supply chain.
India is encouraging the initiative to promote the most difficult and the most expensive tools called ED tools - R & D”. Cadence, Synopsis and Siemens are the three companies in the field, whose EDA2 suite has been taken by the Indian government and provided licenses and login credentials to all 104 universities across the nation. Out of the initiative, the emerging talent pool will feed into a large talent pool of 300,000 engineers already. And, this will feed into our design, our fab and our A-Chip that constitutes 15-20% of the global value chain.
Advanced Micro Devices (AMD), a major US semiconductor chip design company, has plans to invest up to US$400 million in India over the next five years to establish its largest design facility in Bengaluru, expanding its office presence to 10 locations in the country. With already over 6,500 employees in India, the new campus is expected to create around 3,000 additional engineering roles by the end of 2028.
Furthermore, US semiconductor major QUALCOMM’s Design Centre in Chennai. As per reports, Qualcomm would partner with the central and the state governments to create a roadmap to develop industrial electronics, particularly automobile electronics, telecom electronics and board design capabilities, set up 100 5G and 6G labs so that students get opportunities for creating 6G solutions.
In the Budget for 2024-25, the Government of India allocated ₹1-lakh crore as the ‘Research and Innovation Fund’. This fund is a 50-year interest-free grant aimed at catalyzing innovation and research through an industry-academia partnership model. In the near future, ‘Bharat Semiconductor Research Centre’, a global standard institution, will be established at the IIT Madras partnering with renowned international institutions, academia, government, private sector, and start-ups. It will initially be co-located with Semiconductor Complex Ltd and has the potential tube spun off into an independent semiconductor research organization. Also, it’s planned to launch the ChipIN centre at C-DAC Bengaluru. The facility will act as one stop centre to provide semiconductor design tools, fab access, and virtual prototyping hardware lab access to fabless chip designers of the country.
Let me highlight that there have been over 25major milestones since 2020. Semiconductor PLI scheme, June 2021, Semicon India Program, Dec 2021, India semiconductor mission, Dec 2021, Design Linked Incentive scheme, SemiconIndia Future DESIGN, and so on. In 2021, the government sanctioned the Semicon India programme, allocating Rs.76, 000 Crore to provide incentive support to companies engaged in silicon semiconductor fabs, display fabs, compound semiconductors/sensors fabs, and semiconductor packaging and design. Subsequently, in 2022, the India Semiconductor Mission (ISM) was launched to enable India’s emergence as a global hub for electronics manufacturing and design.
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A number of MOUs have been signed to include: USA; Japan; and EU. The US Semiconductor Industry Association (SIA) and the India Electronics and Semiconductor Association (IESA) signed an MOU to establish a semiconductor supply chain and innovation partnership under the framework of the India– US Commercial Dialogue, besides entering into partnership with Purdue University. On June 20, 2023 the Indian cabinet gave approval to Micron’s US$2.7 billion investment plan to setup a semiconductor Assembly, Testing, Marking, and Packaging (ATMP) unit in Gujarat. With Japan, MOU signed spanning five areas: semiconductor design, manufacturing, equipment research, talent development, and supply chain resilience.
During the Summit, 22 Memorandums of Understanding (MOUs) were announced between C-DAC and industry partners for the implementation of the Future LABS. Samsung Semiconductor India Research (SSIR) inaugurated its semiconductor R&D facility in India at Bengaluru (Feb 2024) - IBM and C-DAC to accelerate India’s capabilities for High Performance Computing IBM and the Centre for Development of Advanced Computing (C-DAC), an autonomous scientific society of MeitY, entered into a Memorandum of Understanding (MOU) on March 5 2024, to collaborate on the creation of a joint working group to accelerate High Performance Computing (HPC) in India. As part of this MOU, both parties will promote IBM’s Power processor for HPC applications across Indian start-ups, MSMEs, research organizations, and academic institutions.
Furthermore, the Design Linked Incentive scheme launched has three components – Chip Design infrastructure support, Product Design Linked Incentive and Deployment Linked Incentive. Also, Chips to Startup (C2S) Programme was launched that aims to train 85,000 number of Specialized Manpower over a period of 5 years in the area of VLSI. Indian govt announces Graphics Processing Unit (GPU) cluster under India AI program, Sept 2023 AI program to support the growth of startups focused on training artificial intelligence models within India.
Next, the government introduced the ‘SemiconIndia Future Design” Scheme. Design Linked Incentive (DLI) Scheme offers financial incentives and design infrastructure support for various stages of semiconductor development and deployment, including Integrated Circuits (ICs), chipsets, System on Chips (SoCs), Systems and IP cores, and semiconductor-linked design.
There are many startups that are specializing in semiconductor technology applications to include: AGNIT Semiconductors; In Core Semiconductor; Mindgrove Technologies, IIT Madras; Morphing Machines; Oakter; Saankhya Labs, Bengaluru; Terminus Circuits in partnership with TSMC; and so on.
AGNIT Semiconductors specializes in Gallium Nitride (GaN) semiconductor technology. InCore Semiconductor is building 5thgeneration RISC/RISC-V processor cores in India. Mindgrove Technologies, IIT Madras, works in the space of design and production of SoCs. Morphing Machines is a fabless semiconductor startup building IP products and solutions. Its patented product ‘REDEFINE’ is a many-core SoC platform. Oakter is an Original Device Manufacturer (ODM), which designs and manufactures electronic smart devices. Saankhya Labs, Bengaluru, claims to be the country’s first fabless semiconductor solutions company manufactures integrated circuits (ICs) another components for various satellite and broadcast applications. Terminus Circuits Circuits designs and develops high-speed serial links, which are type of communication protocol that transmits data in a single differential signal, enabling data and clocking information to be sent simultaneously. Terminus Circuits has a partnership with Taiwan Semiconductor Manufacturing Company (TSMC), one of the biggest chip producers in the world.
To sum up, the policies and plans to rapidly adopt and accelerate semiconductor chip making – both normal and advanced –appear to be on sound footing to achieve leadership by 2029.
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