The Union cabinet has approved a ₹76,000 crore scheme to do semiconductor and display manufacturing in the country. The aim of the comprehensive program for the 'development of sustainable semiconductor and display ecosystem' in the country was to make India a global hub of electronic system design and manufacturing. The scheme would provide physical support of up to 50% of the project cost for setting up semiconductor and display fabrication units
The program will usher in a new era in electronic manufacturing by providing globally competitive incentive package to companies in semiconductors and display manufacturing as well as design
INDIA'S SEMICONDUCTOR MISSION
- India semiconductor mission would be set up in order to drive the long term strategies for developing a sustainable semiconductor and display ecosystem.
- The mission would be led by global experts in semiconductor and display agencies and it would act as a nodal agency for efficient and smooth implementation of schemes.
- The trusted sources of semiconductors and display have a strategic importance in current geopolitical scenario and are vita for security of the critical information infrastructure
- The steps taken by government would properly innovation and build mistake capacities to inshort digital sovereignty of India
- It will also help in creation of skilled employment opportunities to harness the demographic dividend of the country
'Chips to start-ups' programme
- According to electronics and information technology minister, electronics manufacturing in country has increased to $75 billion over past 7 years and is expected to reach around $300 billion in next 6 years
- The chips to startups program would develop well trained engineers and the semiconductor designers would be given opportunity to launch startups with the government bearing 50% of expense under the design linked incentive scheme
WHAT IS A SEMICONDUCTOR?
- Dynamically, a semiconductor can be defined as a substance with properties of both conductor and insulator. So, it can be said that a semiconductor is a material that has electrical conductivity greater than insulator but less than a conductor
- Semiconductors like carbon, silicon and germanium have a unique property in their electron structure. It has ability to conduct a small amount of electric current and semiconductors have much lower resistance to flow of electric current in one direction than another
- Basic electronic components such as diodes, transistors and many photovoltaics cells contain semiconductor materials
- The electrical conductivity of semiconductor devices can be controlled over a wide range in their permanently or dynamically.
- Silicon is the most widely used semiconductor material, few other materials used in making semiconductor are germanium, gallium, arsenide and silicon carbide
NEED AND OPPORTUNITY TO BUILD SEMICONDUCTORS IN INDIA
- Global shortage
- The current semiconductor shortage altered Nations globally to the strategic and economic importance of chips and this has opened up unprecedented growth opportunities for India, with 2021 representing a critical moment to secure its place and future success
- Semiconductor manufacturing facility (fab)
- India has been attempting to build a semiconductor manufacturing facility, fab since 2006 to no avail, some experts doubt the pragmatism of efforts as the risks involved and investment required is too high
- Semiconductor fabs have proven to be game changes for economies where there are operational generating significant employment and bringing huge revenues for the countries in world
- There is a need for government to articulate a strategic vision to successfully build a broader semiconductor ecosystem and the cabinets move is a right step in the same direction
- Semiconductor industry opportunity
- From the start of US-China trade war in 2017, supply chains begin to shift and the covid-19 pandemic has accelerated the push to diversify and incorporate more flexibility in the supplier sections
- In particular, the companies in southeast Asia have benefited from this shift, India's strengths include its software leadership, young talent base and startup ecosystem
- The overall semiconductor industry is poised to more than double to over $1 trillion in next decade
- The additional benefits of investing in the industry include labour stability, lucrative pay and strengthened connections to global electronic markets
- India's strength to manufacture semiconductors
- The Indian semiconductor industry offers high growth potential areas as the industries which four semiconductors as inputs are themselves witnessing high demand
- The Industries such as mobile devices, information technology, office automation and several other industries having application for computing are necessarily having growing demand for semiconductors
- With concept of internet of things picking up momentum, the next generation of interconnected device would for the increased the demand for intelligent computing thereby creating sustainable demand for semiconductors
- Complex value chain
- The semiconductor value chain is global, interconnected and incredibly complex as it involves many specialised fields
- Lack of semiconductor manufacturing ecosystem
- Semiconductor manufacturing requires high investment, investment required to set up a fab can range from $3 billion to $6 billion.
- The US based semiconductor companies do most of their manufacturing inhouse and are not open to sell their Technology
- It is difficult for India to create semiconductor on its own because of the lack of some key ingredients as well as technologies
- The lack of foundries implies insufficient experience in foundry interactions and a longer time to market which inhibits the growth of the domestic semiconductor design industry, unless this gap is plugged the ecosystem cannot meet your order will be at a rapid pace.
- Quality of talent
- Fresh talent supply: the difference in expectations between industry and Indian education system results and low skill sets in talent pool graduating from non premier institutes
- Digital vs. analog: although, India has strong abilities in digital technologies it lacks the required number of engineering graduates capable of handling analog technologies
- Lack of product know-how: there is a lack of talent for product conceptualization and management for emerging markets.
- Competition from other countries
- Other countries like China and other Southeast Asian nations have had a complete and material ecosystem which has been built over the past 30 years with presence of domestic players, strong Government support, infrastructure and uninterrupted power.
- Therefore these companies are often preferred by investors over India even in the areas of design related activities
- Protectionist policies by other countries
- The rising insecurity of foreign governments and companies in offshoring activities could become a challenge to attract more work to India
- Investment in R&D
- India needs to invest in advancing research and development in semiconductor related fields such as material sciences, computer science, engineering and applied mathematics to spur innovations
- To attract FDI in R&D India will have to enhance the quality of talent pool to improve contract enforcement, revisit export controls and strengthen IP protection
- Skilling the youth
- While India has a sizable number of STEM graduates the skill levels will have to expand beyond the traditional strength.
- This could be seen as an opportunity to create for profit centers of excellence in PPP mode on the lines of IMEC Belgium.
- The centres of excellence code of first state of art infrastructure, fellowship to graduates and corporate innovation excellent programs
- The skill India mission should focus on addressing the skill gaps in system integration, testing and quality certification
- Role of Government
- The government should take initiative to encourage entries into semiconductor manufacturing segments with relatively lower barriers to entry
- In addition to semiconductor hardware, the electronic design automation software firms that facilitate semiconductor design of a compelling draw to leverage India's strength in software
- Government initiatives for semiconductor Research and manufacturing are critical components to the Nation's goal of competing in the industry.
- Since, governments around the globe are moving to incentivize and grow semiconductor, recognising the importance of ensuring stable and secure supplies of chips for strategic and commercial applications.
- The minister of electronics and information technology should collaborate with organisations and leaders in global semiconductor industry to develop India strategic vision and should involve Indian industrialists and academia
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