Vaishali Basu Sharma
Prime Minister Narendra Modi made the announcement while laying the foundation stone of three new semiconductor manufacturing units (fabs) at Dholera and Sanand in Gujarat and Jagiroad in Assam, India. . The Company has launched his three major projects (worth approximately Rs. 20 million rupees) for semiconductor manufacturing in India. 1.25 billion. These projects will help India become a global hub for semiconductor manufacturing. ”
In a virtual address at the inauguration of a chip factory, PM Modi said the 21st century is technology-driven and cannot be imagined without electronic chips. He said India would soon start commercial production of semiconductors and related products and become a global powerhouse in this sector as well as in the technology, nuclear and digital sectors.
The three semiconductor factories will be set up through a combined investment of 1.25 billion rupees ($15 billion). Tata Electronics Private Limited (TEPL) will set up two upcoming factories at Dholera (Gujarat) and Jagiroad (Assam). The company aims to start commercial production with India’s first semiconductor manufacturing equipment by 2026.
The semiconductor manufacturing facility in Dholera, Gujarat is being developed in collaboration with Taiwan’s Power Chip Semiconductor Manufacturing Corporation (PSMC). With an investment of up to Rs 91,000 crore, India’s first AI-enabled factory is all set to create over 20,000 direct and indirect skilled jobs.
Tata Semiconductor Assembly and Test (TSAT)’s proposal to build a new semiconductor assembly and test facility in Jagiroad, Assam, includes an investment of 27,000 crore rupees ($3.5 billion) and is expected to be completed by the end of 2025. Production is expected to begin by early 2026 and will serve a variety of applications. Sectors include automotive, power, electronics, consumer, and healthcare.
The facility will have the capacity to produce multiple chips starting at 28 nanometers, with plans to advance to 22 nanometers in the future, and will have a production capacity of 48 million chips per day, directly It is expected to create more than 27,000 jobs both directly and indirectly. region.
Murugappa Group-owned CG Power, located in Sanand, Gujarat, has partnered with Japan’s Renesas Electronics and Thailand’s Stars Microelectronics as part of India’s chip push, with a Rs 7,600-crore (or $222 million) Built a semiconductor facility.
The proposed factory in Sanand is expected to have a production capacity of 15 million chips per day. Renesas, a leading semiconductor company headquartered in Japan, provides advanced semiconductor technology and expertise. Stars Microelectronics offers both legacy packaging and training and enablement technology.
With an investment of Rs 5,000 crore (including working capital of Rs 1,000 crore), Keynes Semicon’s Outsourced Semiconductor Assembly and Test (OSAT) unit has been shifted from Telangana to Sanand. US chipmaker Micron and Murugappa Group’s CG Power are also launching chip assembly, test, marking and packaging (ATMP) units. India is separately considering an $11.5 billion semiconductor factory project by Israel’s Tower Semiconductor.
India is becoming an increasingly competitive global player in advanced technology industries, as global value chains are restructured to increase diversification, resilience and security. For example, India could account for up to a quarter of iPhone production by 2030, and recently entered the semiconductor assembly, test and packaging space with a landmark investment by Micron, which will help the country’s semiconductor design industry. We are building on our long-standing strengths. .
Rajiv Chandrashekhar, Minister of State for Electronics and Information Technology, believes that given the current project proposals, India’s semiconductor manufacturing capacity is expected to reach 1.8 million wafers per month soon.
How does its business and regulatory environment compare with other countries competing for competitive advantage in the global semiconductor value chain? Currently, no country in the world has been able to establish a self-sufficient supply chain within its borders. So countries are now considering where they can fit into the chip ecosystem.
Since everyone depends on someone else, the challenge for both countries and companies is to find niches in which they have a comparative advantage and can compete.
Most of the other major economies around the world are looking to build their own semiconductor industries, so when governments and companies think about where to enter and where to focus, they look at the entire competitive landscape and decide where to find a competitive advantage. We need to ask if there is. The benefits are real.
For India, which is trying to build a semiconductor ecosystem, competing head-on with major companies is a huge challenge. Because they are established and have the resources on their side. However, design expertise is something that India has a lot of. of opportunities to take advantage of. The challenge for countries is to find out where their comparative advantage lies in the supply chain.
India has a chance to succeed in its efforts to participate in this ecosystem. Currently, India has a large number of semiconductor design experts. It remains to be seen whether that design ecosystem will develop further. Or will India play a bigger role in other parts of the supply chain, such as manufacturing and assembly?
Competition exists at every stage of the supply chain. For example, manufacturing or production (front-end and back-end) is currently concentrated in Taiwan, China, and South Korea. The United States dominates design, EDA, and core IP, following a “fabless” (manufacturing outsourcing) model in which companies perform design and IP work but outsource manufacturing.
The remaining activities, primarily assembly, test, and packaging, are at the bottom of the semiconductor value chain, unlike design and manufacturing. They are considered relatively low-skilled and capital-intensive and are concentrated in Asia, with China accounting for the largest share.
Indeed, China has invested billions of dollars in a concerted effort for several years to create its own space in this ecosystem. China is making progress, measured by the metric China’s leaders focus on: the share of chips it produces domestically.
However, China still relies on imports of high-end chips from Taiwan, South Korea, Japan and the United States. Compared to 10 years ago, China imports a smaller share of its total chip consumption.
India can play a key role in building a resilient global electronics supply chain, according to the CEO of US semiconductor giant Qualcomm. India has an opportunity to create large companies serving both domestic and global markets in areas such as semiconductor packaging and manufacturing.
India is poised to emerge as a chip maker with large productivity-linked incentives (PLI) for chip manufacturing, a highly capital-intensive activity. Chips are used in everything from debit cards to mobile phones, washing machines to planes, missiles to space rockets, so dependence on other countries, especially China, could put India’s security at risk. .
This makes chip manufacturing strategically important for India. However, this requires significant investment and a well-developed local ecosystem. However, by establishing design, manufacturing and OSAT facilities, India is well on its way to transforming into a global semiconductor hub, driving innovation and economic growth and ensuring technological sovereignty.
- Vaishali Basu Sharma is a Strategic Economics Analyst. She served as a consultant to India’s National Security Council Secretariat (NSCS) for nearly a decade.
- The author can be contacted at postvaishali (at) gmail (dot) com.
