India Semicon Mission: Paving the path to Self-Reliance in Semiconductor Manufacturing

• Vikas Kumar
• October 1, 2024
• BLOG, ELECTRONICS & SEMICONDUCTOR
• 0 Comments

“In the 21^st century chips are never down …..When the chips are down, you can bet on India” – Hon’ble Prime Minister Narendra Modi inaugurated Semicon Mission Phase 2 India 2024 with this quote which was held at India Exposition Mart Ltd. in Noida from 11 Sept to 13 Sept.

How is this mission important for the semiconductor investors? Will India be able to become self-reliant in this industry? We will delve deep into the market by fathoming this mission’s future prospects, policies, and initiatives.

In the first half of 2020, there was an abrupt and cascading shortage of semiconductors causing drastic deteriorations during Covid19 pandemic as such to halt production of manufacturing plants. Stranded in the Semiconductor- crisis, the Indian government launched the “India Semicon Mission” to cope with the semiconductor deficiencies and self-reliance in the semiconductor market.

Why India Semicon Mission Initiated?

In 2020, the whole world grappled with the shortage of semiconductor chips due to supply chain disruptions. This was the cumulative effect of many factors. As Covid-19 pandemic caused turbulence by halting the production of manufacturing plants globally and disrupting shipping and logistics. Russia- Ukraine war also disrupted the supply chain as Ukraine was the supplier of (Neon and palladium) raw materials specifically used in semiconductor manufacturing. The “Chip war” between the US and China which was growing because of the political tensions to become the global semiconductor leader also caused havoc.

Asia Pacific economies such as China, Taiwan, South Korea, and Japan account for more than 72% of global semiconductor production. Overdependence on foreign countries can be a great threat to the Indian economy. For example, If China seizes control of Taiwan which holds 56% of the market share, may inhibit industries dealing with semiconductors. The India Semicon Mission initiative is important from the viewpoint of national security, as well as for other crucial sectors such as telecom, defense, etc.  For example, the US banned Huawei citing security issues and national threats.

India Semicon Mission’s thriving journey so far

India Semicon Mission establishment conferences: 

India Semicon Mission, first edition named as “Semicon India 2022” conference was organized in Bengaluru to showcase India as a hub for semiconductor design and manufacturing. With its success, India Semicon Mission organized the “Semicon India 2023” conference with the theme “Catalysing India’s Semiconductor Ecosystem” in Gandhinagar, Gujarat. “Semicon India 2023” witnessed the participation of 8,000 persons from over 23 countries and industrialists from major global companies such as Micron Technology, Applied Materials, Foxconn, Cadence, and AMD, fueling its economic growth.

This conference highlighted talent investments, research initiatives, and a collaborative framework. “Semicon India 2024” conference organized by India Semicon Mission was participated by more than 250 companies from 24 different countries event all eyeing India’s drastic transition towards becoming a Semiconductor powerhouse.

Government of India’s greatest possible effort by providing subsidies and incentives

The government of India came up with a USD 10 billion incentive program for the semiconductor industry. The government has taken proactive steps bringing astounding schemes such as –

• The Modified Schemes for Setting up of Semiconductor Fabs and Display Fabs – which will provide Fiscal support for setting 50% of project cost on a pari-passu basis for all technology for setting up semiconductor and display Fabs in India. Up to 2.5% of the outlay of the schemes is intended to support the R&D requirements for the development of the ecosystem and Skill Development and Training requirements.
• The Modified Schemes for Setting up of Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs / Discrete Semiconductor Fabs and Semiconductor ATMP / OSAT facilities which will provide Fiscal support for setting up 50% of capital expenditure on pari-passu basis for setting up of Compound semiconductors, Silicon Photonics, Sensor Fabs, Semiconductor packaging, Semiconductor design etc.
• Design Linked Incentive which will provide 50% of expenditure and deployment linked incentive of 4%-6% for attaining 1,500 crore turnover in the next 5 years.
• Modernization and Commercialization of Semiconductor Library of Mohali. Because of these policies and incentives, India has attracted investments worth more than INR 1.5 trillion in a very short time and many more projects are in the pipeline.

Collaborations with IITs and industrial giants for R&D, manufacturing

India being the abode of 20% semiconductor design engineers has set up a special research fund of INR 1 trillion.

On July 15, global chip giant AMD announced a partnership with the Society for Innovation and Entrepreneurship (SINE) at IIT Bombay, AMD will provide grants to startups incubated at IIT Bombay that are working on developing energy-efficient Spiking Neural Network (SNN) chips.

India is dreaming that every device in the world should have an Indian-made chip. It is planning to establish a Semiconductor Research Center at the Indian Institute of Space Sciences, in collaboration with IITs, to produce not only high-tech chips for today but also next-generation chips.

In Feb 2024, Samsung Semiconductor India Research (SSIR) unveiled a new semiconductor R&D facility in India at Bengaluru. Micron and Qualcomm have set up R&D facilities in Hyderabad with the very first Fabless incubator at IIT Hyderabad.

Recently, TSSC partnered with “Semicon Academy” to offer specialized training in design, testing, and physical implementation in the VLSI domain. This initiative aims to integrate high-end skills training into colleges, schools, and corporate environments within this fiscal year. The goal is to build a robust talent pool capable of driving innovation and growth in the semiconductor industry.

India Semicon Mission have an optimistic impact in gaining investment inflows

FDIs and Domestic Investments

With the recent FDIs and domestic investments, it can be seen India is all set to hold sway in this industry. Both Foreign and Domestic Conglomerates are equally interested in this industry which is being shown in their huge investments.  Many Semiconductor industry powerhouses such as Tata, Adani, Kaynes Semicon Pvt Ltd., RRP Electronics, and Micron Technology have announced investments in the Indian semiconductor ecosystem, with several others fathoming to explore manufacturing opportunities. Analysis shows that investments received by partnerships have been of higher values accounting for INR 1,82,547 crore done by Indian giants such as Tata and Adani. While standalone investments have considerably been lesser accounting for INR 89,389 crores done majorly by Micron Technology, Kaynes Semicon Pvt. Ltd., RRP Electronics, and Tata Semiconductor Assembly and Test Pvt. Ltd. Up till now, Standalone Domestic investments have come up around INR 66,873 crore. Moreover, Manufacturing units require huge investments as compared to Packaging, and Assembly units.

Tata alone has come up with INR 1,18,000 crore investments. Tata Electronics is expanding its semiconductor manufacturing capabilities with two additional Fabrication plants (Fabs) in Dholera, Gujarat worth INR 91,000 crore which will be producing up to 50,000 wafers per month. CG Power & Industrial Solutions Ltd. in partnership with Renesas Electronics Corporation will be setting up ATMP units in Sanand, Gujarat with an investment of INR 7,600 crore. Micron recently commenced construction on its USD 2.75 billion assembly and test facility in Gujarat. Kaynes Semicon Pvt Ltd. is investing INR 3,300 crore to establish a Semicon manufacturing unit in Sanand, Gujarat.  

Bengaluru leading the Semiconductor start-up hub

With the burgeoning 15 Indian semiconductor start-ups, this industry may bring revolution at the global level. Saankhya Labs, Mindgrove Technologies, Terminus Circuits, Morphing Machines, FermionIC Design, Oakter, Agnit Semiconductors, Incore Semiconductors are some of them. Bengaluru being the Silicon City is leading the startup hub with (63.7%) of ventures, followed by Delhi NCR (9.9%), Hyderabad (5.5%), and Chennai (4.4%). The central government has set up a special reserve fund with an outlay of INR 1 lakh crore to drive innovation in the semiconductor and science & technology sectors extending easier support to raw material suppliers, gas suppliers, and other vendors in the semiconductor ecosystem. Other developing states that have favourable conditions such as cheap labour, easy transportation and cargo facilities should come forward to explore the growth opportunities in this sector.

India Semicon Mission may generate employment opportunities and boost industrial growth

This mission may prove a boon to the Indian economy by generating employment opportunities with an anticipated market size of more than USD 100 billion and an additional 600,000 jobs by 2030. The Indian semiconductor ecosystem is poised to become an important contributor in growing the global industry to USD 1 trillion by 2030. With this Semicon program, India will create a semiconductor workforce of 85,000 technicians, engineers and R&D experts.

The government should accentuate more on manufacturing plants rather than just setting up packaging facilities

India is committed to being developed as a diversified and resilient semiconductor supply chain. India with 1.4 billion people is a huge market for electronics, automotive, IT, and healthcare industries. Thus, it may not only serve as having enormous potential for domestic consumption but also as the hub of skilled technical youths required for this industry.

It aspires to have 10 semiconductor manufacturing plants in 10 years which is comparatively very low according to the growing needs of the consumers.

For India to excel in the semiconductor supply chain, states like Uttar Pradesh should come forward and take initiatives to provide favorable conditions for setting up manufacturing plants. The government should also provide scholarships for research and development in this industry as it is high time to allure Indian youths inclining them towards semiconductor industry, seeing this as a potential career growth option. Although India is offering 70-75% subsidies to market entrants and other benefits but it should aim to make India a manufacturing hub not mere “designing and packaging hub”. Up till now the investments, by the Indian government has been more towards packaging centric. It should emphasize on the production of Semicon chips to achieve self-sufficiency and becoming self-reliant in the semiconductor supply chain. By adopting these initiatives and collaborations with IITs and other big giants may gig the GDP growth rate of Indian economy exhibiting the optimistic impact of this Mission.