Editorial: Semiconductor dreams

Though India traditionally had strong base for semiconductor design industry, hardware manufacturing remained elusive

India’s ambitious plan to promote large scale manufacture of semiconductor chips — a sector that offers huge potential amid global shortages — appears to have hit a wall. The response to the Centre’s much-publicised incentive policy to woo chipmakers has been anything but encouraging. No wonder that the government has now reopened the window for applying to its Rs 76,000-crore semiconductor manufacturing plan after the first window failed to attract any major names. The new window, which opened on June 1, will remain until December 2024 and the response this time will be critical for the development of the semiconductor industry, which is expected to be worth $63 billion by 2026. The government sweetened the scheme last September by allowing for uniform fiscal support of 50% of project cost for semiconductor fabs across technology nodes and display manufacturing. When the incentive policy was first unveiled in December 2021, it received three proposals from Vedanta-Foxconn joint venture, international consortium ISMC which included Israel-based Tower Semiconductor, and Singapore-based IGSS Ventures. However, all the three have run into rough weather for various reasons. While Vedanta-Foxconn is unable to find a technology partner, the ISMC, backed by Abu Dhabi-based Next Orbit and Israel’s Tower Semiconductor, has asked the Centre not to consider its proposal owing to a pending merger between Intel and Tower Semiconductor. Singapore-based IGSS Venture’s proposal was found not up to the mark by the government’s advisory committee and has been put on the backburner.
Building semiconductors domestically is important for India’s vision to emerge as an electronics manufacturing hub and eventually reduce its imports from foreign countries, especially China – which remains the number one destination for the sector.

Semiconductors have an all-pervading impact across sectors like automobiles, smartphones, laptops, tablets, consumer durables, gaming consoles and other electronic products. Promoting semiconductor fabs through a set of attractive incentives has become a geopolitical priority now. Though India traditionally had a strong base for semiconductor design industry, hardware manufacturing has remained elusive. Over the last 15 years, several consortiums made multiple attempts at chipmaking but things never worked out. Taiwan and China continue to dominate the global market. Made of silicon, chips are tiny objects that perform a host of functions like powering displays and transferring data. Integrated circuits, microchips, transistors and electronic sensors are built with semiconductor materials. They enable key functions such as high-end computing, operation control, data processing, storage and input and output management. Through the incentive policy, India seeks to reshape supply chains to cut its reliance on China amid a global chip shortage that has impacted the production of goods. In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance and are key to the security of critical information infrastructure. Any country that does not learn to make semiconductors will lag behind others.

---