India's Ambitious Leap into the Global Semiconductor Arena

India's big bet on semiconductors; a high-stakes game with global giants

India aims to strengthen its position in the global semiconductor supply chain with a supportive policy environment and a growing market. However, challenges include regional trade bloc exclusions and competition from US and EU incentives. India must leverage partnerships with Taiwan and the US while enhancing its policy and talent offerings.The PM wants India to go big on the global semiconductor supply chain. That's a laudably ambitious plan. The country offers a facilitating policy environment and a growing market for chips. But there are challenges. Keeping itself out of a regional trade bloc that dominates the global semiconductor supply chain is one. The China-led bloc would have found it easier to diversify chip-making to India if its tariffs were not an impediment. On the other hand, the investment incentives New Delhi is offering to seed a chip industry in the country has to compete with handouts being offered by the US and EU to keep chip production at home, or in their immediate neighbourhood. India's best hope are Taiwan and the US. Taiwan is seeking to diversify its chip manufacturing base, but is inextricably tied up by Chinese manufacturing to maintain its competitive advantage. The US could offer India a peripheral role at best as it builds its own semiconductor capacity. Declustering of semiconductor production from East Asia will be expensive and drawn-out. Over the course of the next decade, government-led industrial programmes will seek to mimic the efficiency the chip industry has acquired by being concentrated in China, Taiwan and South Korea. If governments elsewhere falter in their resolve to make chip supply more resilient, markets will tend to favour East Asia's established advantage in materials production. There is also an element of uncertainty over investment decisions as demand is altered by tech such as AI. Finally, mismatches can emerge in the talent pool for research, design and production of semiconductors. Yet, the opportunity is too big to be disregarded. The world is expected to invest 3x in chip-making over the current decade than it has over the previous one. Diversification is projected to spread to Europe, the Americas and Southeast Asia. India can't afford to miss the bus. It'll have to position itself with the right combo of policy and talent offerings. And, yes, it'll have to be more aggressive with its silicon diplomacy.

Why Semiconductors Have Become Fulcrum Of Geopolitics, Economy, And Where Does India Stand In The Race? - News18

Disruptions from the US-China trade wars resulting in increasing usage of tariffs, the ban of Huawei from 5G rollouts and the Ukraine-Russia war and Israel-Hamas conflict are affecting the global supply chain Imagine saving up for your dream car, then going to the showroom with money in hand - only to be told that the wait time for the car is longer than a year. The reason? Shortage of semiconductor chip supply. In 2021, this was the global reality as supply shortages resulted in the auto industry losing roughly $200 billion in revenues. Today, semiconductors are everywhere - cars, laptops, coffee machines, phones, etc. semiconductors have become the main pivot of the global economy and a key part of diplomacy in government and defence sectors. Semiconductors form the bedrock of processing the data behind the surge in generative artificial intelligence models, the cloud and intelligent devices. Oil, which was once considered the key driver of geopolitics, is now replaced by semiconductors in the modern technological landscape. The market size of semiconductors is expected to reach $1 trillion by 2030, due to their ubiquity in the development of AI, 5G, quantum computing, and industrial automation. Let us break down the diversity and complexity of the semiconductor market for you, what does it offer, the market leaders, how it is being threatened by geopolitical conflicts and where does India stand. The scale of use of semiconductors is massive as they are used as: Microprocessors: The brains of computers and digital devices, executing instructions and calculations Memory chips: Store data and programme instructions, including RAM for temporary storage and ROM for permanent storage Graphics Processing Units: Specialised chips for high-performance graphics rendering in gaming consoles and computers, also used in the development of GenAI LLMs (large language models) Application-specific integrated circuits: Custom-designed chips optimized for specific tasks like cryptocurrency mining and networking Field-programmable gate arrays: Programmable chips offering flexibility for rapid development and specialised tasks Analog integrated circuits: Process continuous signals like audio and sensor data, used in amplifiers and power management Digital signal processors: Efficiently process digital signals in multimedia and communication systems Sensor chips: Integrate sensors for measuring physical quantities and environmental conditions in various devices and systems System on a chip: Integrated circuits integrating most or all components of multiple types of semiconductors like power management, connectivity, storage, or processing. NVIDIA, which claims to design the most advanced AI chips, sold 2.5 million AI chips in 2023, and its market cap now exceeds $2 trillion. Google is spending up to $3 billion to build its AI chips, while Amazon is budgeting over $200 million for AI-centric chips. Others are going further: Apple, Meta, and Microsoft are embarking on efforts to design chips optimized for their environment and workloads, according to HFS Research. Japan is home to prominent tech companies and electronic giants and leads the world with 102 semiconductor fabrication plants. Taiwan follows closely with 77 plants, including the world's largest independent semiconductor foundry, while the US has 76 plants. The Taiwan Semiconductor Manufacturing Company Limited (TSMC) has built its leadership position by providing the most advanced manufacturing facilities and leaving the design to its clients. TSMC produces nearly 60% of all semiconductor chips used worldwide and manufactures 90% of the most advanced technology chips used in phones, industrial equipment, and military systems. TSMC is also the main manufacturer of NVIDIA's most advanced manufacturing chips. But recent events such as cryptocurrency's surging demand, trade barriers between the US and China, and geopolitical tensions have shown the complexity of the industry's globalised supply chains, which resulted in production delays and shortages. Thus, many countries are already investing significantly in semiconductor research and development and manufacturing. This will not only put them in advantageous position to control the supply chain and gain economic strength but become investment magnets and create high-tech jobs. Emerging economic like India, Indonesia and Malaysia are positioning themselves to seize the opportunities in the global semiconductor industry. Disruptions from the US-China trade wars resulting in increasing usage of tariffs, the ban of Huawei from 5G rollouts and the Ukraine-Russia war and Israel-Hamas conflict are affecting the global supply chain. In March 2017, the Chinese telecommunications firm ZTE Corporation was fined $892 million after pleading guilty to violating U.S. sanctions law. In April 2018, it admitted that it had lied about complying with the terms of the settlement with the US government, and the Department of Commerce immediately placed a ban on American companies on selling to the company. Additionally, the Chinese government's declaration of "reunification" with Taiwan has frayed some nerves, with the US stating that it will defend Taiwan if it is attacked. The conflict in the region could disrupt the supply chain of the world's advanced semiconductor manufacturer. The shifting of supply chains is the first trend showing that a partial decoupling is underway. Samsung has announced that it will begin making semiconductor parts in Vietnam in July 2023 to diversify its manufacturing, given how China, the US, and other nations are engaged in a race to secure their supply chains, as per the Carnegie Endowment. The Confederation of British Industry and Commerce has said that UK companies are "rethinking their supply chains" in a "world decoupled from China". In partnership with the Saudi Arabian government, Foxconn is investing $9 billion in establishing a foundry project in the city of Neom, which will act as a production hub for semiconductors and components for electric vehicles and other electronics. TSMC opened its first factory in Japan in February 2024 and has announced plans to invest in a second plant, which will begin operations by 2027, bringing its investment to more than $20 billion with the help of Japanese government subsidies. In June 2023, Intel announced plans to invest $33 billion, partially subsidized by the German government, to build two semiconductor facilities in Germany. India is positioned to become a major player in the global semiconductor industry, backed by its vast engineering talent, evolving technology ecosystem, and government support. The National Electronics Policy (NEP) aims to establish India as a hub for electronics system design and manufacturing (ESDM), including semiconductors. With an allocation of $363 million to the Indian Semiconductor Mission, India is poised to attract investments from global players, as per a report by Business Standard. In December 2021, the Indian government approved a $10 billion incentive programme to promote semiconductor manufacturing. The Tata Group is setting up two semiconductor manufacturing plants in the states of Assam and Gujarat, intending to start production by 2026. It is undertaking technology transfer with the help of Taiwan's Powerchip Semiconductor Manufacturing Corporation (PSMC), the world's seventh-largest pure-play foundry. CG Power and Industrial Solutions is setting up a joint venture with Japan's Renesas Electronics and Thailand's Stars Microelectronics to operate an outsourced semiconductor assembly and test facility. Foxconn has partnered with HCL Group for semiconductor assembly and testing as it aims to enter the chip-making space in India. India and Singapore on September 10 signed an agreement to partner and cooperate in semiconductors. A Memorandum of Understanding (MoU) was signed during Prime Minister Narendra Modi's two-day visit to Singapore. "Singapore and India will leverage complementary strengths in their semiconductor ecosystems and tap on opportunities to build resilience in their semiconductor supply chains," Singapore's trade ministry said in a statement.

India's Road to Semiconductor Glory: Paved with Innovation and Global Ambition - News18

From state-of-the-art fabrication plants to thriving design hubs, India's burgeoning semiconductor ecosystem promises not only economic growth, but also a new era of technological self-reliance The integrated circuit (IC), commonly known as a 'chip' or 'semiconductor', is the fundamental building block of a wide range of modern technologies. From smartphones and medical devices to artificial intelligence (AI), quantum computing, space exploration, atomic energy, and telecommunications, semiconductors power critical advancements across industries. This innovation-driven sector has fuelled the Fourth Industrial Revolution, merging human ingenuity with the capabilities of machines. Globally, semiconductors rank as the fourth most traded product, following crude oil, refined oil, and automobiles, underscoring their immense economic and technological significance. India has recognised the potential of this industry and stands on the cusp of a transformative era, poised to become a global hub for semiconductor manufacturing. Under the leadership of Prime Minister Narendra Modi, India has unveiled an ambitious roadmap to position itself at the forefront of this vital industry. This initiative is more than just a push for economic growth; it represents a strategic move towards technological self-reliance and sustainable development. This guide explores the country's efforts to expand its semiconductor industry and its quest to emerge as a leading global player in this critical field. India's journey to becoming a semiconductor powerhouse took a decisive step with the launch of the India Semiconductor Mission (ISM). This initiative aims to build a robust ecosystem for semiconductor and display manufacturing, driving growth in key areas such as silicon semiconductor fabs, display fabs, compound semiconductors, sensors, and semiconductor packaging. The ISM seeks to establish a thriving design and innovation environment, positioning India as a global leader in electronics manufacturing. By focusing on long-term strategies to develop cutting-edge manufacturing facilities, a secure supply chain, and essential intellectual property, the mission aims to fuel sustained innovation in the semiconductor industry. In its pursuit of becoming a global semiconductor powerhouse, India has established several key facilities. These include a chip fabrication unit in Dholera, Gujarat, and four assembly and testing plants, known in the industry as ATMPs (Assembly, Testing, Marking, and Packaging) or OSATs (Outsourced Semiconductor Assembly and Testing). Three of these plants are located in Sanand, Gujarat, while the other, situated in Morigaon, Assam, is the nation's first indigenous semiconductor assembly and testing facility. Its location in the hitherto neglected Northeast speaks volumes. Apart from these, the Maharashtra government recently approved a major semiconductor manufacturing project, a joint venture between Israel's Tower Semiconductor and the Adani Group, to be established in Panvel, Raigad district. With a substantial investment of Rs 83,947 crore, the project will initially have a production capacity of 40,000 wafers per month in Phase 1, scaling up to 80,000 wafers per month in Phase 2. Once operational, this facility will become India's second chip manufacturing plant and the sixth semiconductor facility involved in silicon chip production or testing, further bolstering the nation's semiconductor ambitions. So far, the Indian government has approved projects amounting to Rs 1.5 lakh crore under the India Semiconductor Mission. The Union Budget 2024-25 further strengthens support for the semiconductor industry, including targeted incentives for MSMEs, which are expected to play a crucial role in the semiconductor supply chain by providing vital components and services. The budget also emphasises the development of industrial parks with plug-and-play facilities across 100 major cities, designed to serve as innovation hubs and accelerate the establishment of semiconductor manufacturing units. These efforts are part of the broader 'Development of Semiconductors and Display Manufacturing Ecosystems in India' initiative, backed by an allocation of Rs 76,000 crore. This comprehensive programme highlights the government's commitment to building a self-reliant semiconductor industry and positioning India as a global leader in the sector. India's push toward semiconductor manufacturing is also closely aligned with its green energy initiatives. The roadmap includes key projects such as green hydrogen, electric vehicles, and small nuclear reactors, all of which aim to provide a sustainable energy foundation for semiconductor manufacturing. By reducing the carbon footprint of these facilities, India is working to meet global sustainability targets while fostering technological growth. Equally critical to this growth are semiconductor design services, which involve creating detailed blueprints for semiconductor devices to ensure they meet specific performance requirements. Semiconductor design and development services take this process further, overseeing everything from initial concept to final product creation. These services are pivotal in driving innovation in semiconductor technology and enhancing existing designs, ultimately boosting India's competitiveness in the global market. International reports from leading firms such as KPMG, PwC, EY, and Deloitte underscore the rapid growth of India's semiconductor market. According to a KPMG report, "India is home to 20 per cent of the world's semiconductor design workforce, supported by a fast-evolving technology landscape and a robust domestic market -- key factors driving the development of a homegrown semiconductor ecosystem." These insights emphasise India's potential to become a significant player in the global semiconductor industry. Programmes like the recently held SEMICON India, which supports companies in semiconductor designing, manufacturing, and packaging, are bolstering the semiconductor industry. The Covid pandemic and the China-Taiwan conflict exposed vulnerabilities in the global semiconductor supply chain, leading to disruptions in industries such as automotive, electronics, and medical devices. This crisis sparked a shift in global strategy to diversify chip production, with India emerging as a key player in these efforts. India's ambitious semiconductor manufacturing plans are poised to reshape its economic landscape. The nation is also set to capitalise on the Australia-India Economic Cooperation and Trade Agreement (ECTA) and enhance the bilateral Critical Minerals Investment Partnership. This strategy will secure a steady supply of essential raw materials needed for both front-end and back-end semiconductor manufacturing processes. As the world contends with semiconductor shortages and seeks more robust supply chains, India is strategically positioned to emerge as a major player in the global semiconductor market. This initiative is designed not only to address India's increasing semiconductor needs but also to enhance the global supply chain, bolstering its role in future-focused industries. India's commitment to semiconductor manufacturing represents a crucial step toward economic self-reliance and sustainable development, with significant long-term global implications.