GD Topic - Making India a Semiconductor Powerhouse: The SEMICON India Programme

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Senior Executive - Editorial

Updated on Dec 31, 2024 13:09 IST

With MBA entrance exams going on, candidates planning to get admission in MBA must prepare well for the Group Discussion Round. Find detailed information on India’s Initiatives to be a Semiconductor Powerhouse and the SEMICON India Programme.

Group Discussion is the second step in the MBA admission process. For admission to the MBA programme, candidates have to first take the entrance exam. There are several entrance exams for MBA admissions, including, CAT, XAT, SNAP, NMAT, and MAH MBA CET. Once the entrance exams are over, candidates with the required percentile can participate in the GD/PI round at their desired B-school, like IIM, XLRI Jamshedpur, SBIM Pune, etc. During the GD round, a group of candidates have to indulge in a discussion of the given topic for about 20-25 minutes. During the discussion, the candidates are supposed to showcase their communication skills, critical thinking ability, leadership skills, time management skills, and English proficiency. Based on the scores given by the judging panel, the selected students can move on to the next part of the admission process in MBA.

To do well in the GD/PI round, candidates are advised to go through different GD Topics and understand how to present their thoughts and communicate well with others. It is also essential for the candidates to make sure they know about the current happenings around the world. It will help them put their viewpoint during the Group Discussion Round.

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Introduction to Semiconductor Chips

In the 21^st century, semiconductor chips (SC) are the building blocks of modern technology. These chips power everything from smartphones and laptops to advanced weapon systems, security systems, and artificial intelligence. With the world becoming increasingly dependent on these tiny chips, many countries, including India, are racing to secure their place in the global semiconductor supply chain. With its growing economy, supportive government policies, and skilled workforce, India aims to become an international hub for semiconductor production by 2030. With this, India can meet its domestic needs and become a key player in shaping the future of global technology.

To understand the importance of entering the semiconductor supply chain, we must first learn about semiconductors and their production.

What is Semiconductor?

As we have all studied in basic science, there are conductors, from which current can flow easily, and insulators which resist the flow of current. Now, between these materials, comes the semiconductors. Semiconductors are the materials like silicon or germanium, which can regulate the flow of electricity by adding small amounts of impurities, called dopants (including phosphorus, antimony, indium, gallium, etc.), through a process called doping. These semiconductors are the base of the Semiconductor Chips, which are tiny yet powerful electronic circuits found in smartphones, televisions, refrigerators, air conditioners, national security systems such as drones, missiles and radars, and in advanced technologies like artificial intelligence, machine learning, and blockchain.

Types of Chips

The semiconductor chips can be classified based on the current flow, functionality, and technology level. These are:

1 Based on the Flow of the Current

Analog Chips: The chips in which current flows continuously. For example, chips in sensors.
Digital Chips: The chips in which current flows in binary form. Most of the chips we use in our daily life are digital chips.

Based on Functionality

GPU Chips: The chips used in video editing, video rendering, and simulation.
Memory Chips: The chips used for data storage.
ASIC: These are supplication-specific integrated chips, like those used in barcodes for payment.
System on Chip (SOC): The multi-functional chips, like chips used in smartphones.

Based on Technology Level

Legacy Chips: The chips with more than 28 nanometers. These are suitable for standard tasks.
Advanced CEC: The chips with less than 28 nanometers. These chips are more powerful and efficient.

The power of semiconductor chips can be determined by the number of transistors embedded in a single chip. A semiconductor chip with more transistors is more powerful, will consume less power, and work more efficiently. The size of the transistors embedded in the chips is Nanometer.

For example, the recently launched iPhone 16 uses advanced chips; A18 Pro. These chips have three nanometers, which means that the size of the transistors used in this chip is less than three nanometers. Therefore, these chips contain more than 20 billion transistors.

How are Semiconductors Produced?

The production process of semiconductors is quite fascinating. The process converts raw materials into tiny, powerful chips that drive modern technology. Here is the step-by-step journey of semiconductor manufacturing:

1. Raw Material Preparation: The production process of semiconductor chips begins with sand, a material commonly used in construction. For this, a particular variety of sand is selected and purified to extract silica. The silica undergoes further purification to achieve a purity level of 99%. The purified silica is heated at a very high temperature to create silicon ingots. These ingots are changed into cylindrical shapes and are then sliced into ultra-thin wafers, which serve as the base for building the semiconductor circuits.

2. Photolithography (Creating Circuit Patterns): The silicon wafers are coated with a light-sensitive material, photoresist. After the coating, a photomask, a glass plate imprinted with the desired electronic design is placed over the wafer.

Using photolithographic technology, light passes through the photomask onto the silicon wafers, which imprints the exact circuit pattern onto the wafer. This process is repeated multiple times to pack billions of transistors onto the wafers at a nanometer scale, forming the semiconductor circuit.

3. Cutting and Testing of the Chips: Once the silicon wafers are transformed into a network of electronic circuits, it is cut into individual chips. These individual chips undergo testing to ensure their accuracy and efficacy.

4. Assembly, Testing, Marking, and Packaging (ATMP): The final stage of the production of semiconductor chips is called ATMP. This step involves assembling the chips, further testing, marking them with specifications, and packaging them for integration into electronic devices.

The last step prepares the semiconductor chips for real-world use.

Specialization in Semiconductor Production

Over time, the semiconductor chip manufacturing process has become highly specialized, leading to the development of different types of companies:

Integrated Device Manufacturers (IDMs): These companies manage the entire process in-house, from design to production to packaging (ATMP stage) of the semiconductors. For example, Intel, Samsung, and Micron.
Fabless Companies: The companies that focus solely on chip design and rely on other companies for manufacturing are known as the Fabless Companies. For example, NVIDIA, Broadcom, and Qualcomm.
Engineering Design Automation (EDA) Companies: The design companies (fabless companies) take help from some specialized companies known as the EDA Companies for specialized software to create chip designs. For example, Cadence and Synopsys.
Fabrication Plants (Foundries): These manufacturing plants or facilities produce chips based on the designs given by fabless companies. Taiwan Semiconductor Manufacturing Company (TSMC) is the largest foundry globally. Some of the other foundries include Global Foundry in US, PSMC and UMC in Taiwan, and SMIC in China.
Outsourced Semiconductor Assembly and Test (OSAT) Providers: Once the foundries complete the production process, the next stage of the supply chain; i.e., the ATMP stage is completed by the OSATs. For example, ASE and Amkor.

From this, we can see that the production of semiconductors is a highly coordinated and global process. Each stage takes place in different parts of the world. For example, the designing of semiconductor chips is mostly done in western countries, manufacturing and ATMP are concentrated in Southeast Asia (Taiwan, Vietnam, Malaysia, Japan, and South Korea), and equipment and materials are taken from European Countries (Photolithography machines from ASML, specialized glass from Germany, raw materials from Japan and Korea, and sand from Australia).

Need for Semiconductor Production in India

From the above discussion, we can see that the production of semiconductor chips is a specialized function, which raises a question; Why does India want to venture into semiconductor production? Here are some of the reasons behind the Indian Government’s attempt to give rise to semiconductor production in India:

Reduce Dependence on Imports: 95% of the semiconductor chips used in electronic devices in India are imported. The Indian government aims to achieve over $500 billion from the electronics market by 2030 which is impossible without creating in-house semiconductor production facilities.
Job Creation: The semiconductor supply chain consists of three major stages: design, manufacturing, and ATMP (Assembly, Testing, Marking, and Packaging). Among these stages, the ATMP stage has low entry barriers. It also requires minimal skills, making it an excellent opportunity for India to attract companies to come here and start the ATMP function.
Less Migration: Indian engineers account for over 20% of the global semiconductor design workforce, which shows India’s strength in design expertise. Hence, by opening companies in India, Indian engineers will not migrate to other countries for jobs.
Strategic Importance: Semiconductors are important for India’s technological and economic progress. By establishing its semiconductor production, India can safeguard its technological future and reduce dependency on external sources.

Semiconductor in India

It is not the first time that the Indian government has attempted to enter into the semiconductor industry. In 1976, a Semiconductor Complex Lab (SCL) was set up in Mohali. The technology used for producing semiconductor chips at that time was just one step behind the most advanced semiconductor chips in the world. However, India’s attempt to progress in this industry failed when a fire broke out in the Semiconductor Complex Lab in 1989. After that incident, the Indian government has now started to rebuild what was lost back then through different initiatives to make India a global hub of the semiconductor industry.

Government Initiatives to Promote Semiconductor Production in India

After recognizing the importance of the semiconductor industry, Indian Prime Minister Narendra Modi has launched initiatives to take the country’s semiconductor sector forward and make it a semiconductor powerhouse of the world. One such initiative is the SEMICON India Programme.

SEMICON India Programme

The SEMICON India Programme is a strategic initiative launched by the government of India to establish the country as an international hub for semiconductor manufacturing, design, and innovation. The vision of this programme is to reduce dependency on imports and place India as a major player in the global semiconductor supply chain. To fulfill the goals, this programme is backed by various investments and policies.

Here are the key highlights of the SEMICON India Programme:

Financial Support and Investments: The SEMICON India Programme is supported by over $10 billion fund to develop India’s semiconductor ecosystem. This fund promises up to 50% of the project cost for semiconductor manufacturing units and related infrastructure in India.
India Semiconductor Mission (ISM): ISM is the nodal agency of the SEMICON India Prpgramme. It provides targeted incentives across all stages of the Semiconductor Production Supply Chain, including the semiconductor Fabrication Plant, Display Fabrication Plant, ATMP or OSAT Facility, and Design Semiconductor Circuit.
Incentive Schemes: ISM provides specific incentives for different stages or functions of the semiconductor manufacturing process.
- Design-Linked Incentives (DLI): These incentives encourage companies specializing in chip design by giving them financial support.
- Production-Link Incentives (PLI): These incentives focus on boosting electronics and semiconductor manufacturing.
- Electronic Development Fund (EDF): Another incentive provided under the SEMICON India Programme is EDF. It funds research, development, and innovation in the semiconductor industry.
Ease of Doing Business: There is a 100% automatic route FDI open for the Electronic System Design and Manufacturing (ESDM). The scheme also streamlines regulations and infrastructure support to attract global and domestic players.
Global Partnership: Under this programme, the Government of India is also partnering with key nations like Japan, South Korea, the United States, and Singapore to strengthen the semiconductor supply chain. This will help India leverage diplomatic ties to attract investment and expertise in semiconductor manufacturing.

The Global Semiconductor Race: India’s Position in the World

The Indian Government is taking all possible initiatives at national, international, regional, and group levels to make India a hub for semiconductor production, and these initiatives are not going in vain. In this competitive global environment, India is making significant improvements in this industry. Besides, many companies like Micron, Global Foundry, Tower Group, and PSMC are either setting up their plants individually or by partnering with domestic partners. For example, TATA, Adani’s, CG Power, and L&T are collaborating to make India a semiconductor powerhouse. The Indian semiconductor market is projected to reach $7.69 billion in 2024 with and sim of achieving $80.3 billion by 2028 at a CAGR of 17.10%.

India is not alone in incentivizing semiconductor production. Countries worldwide are implementing aggressive strategies to dominate this sector. The US introduced the CHIPS Act in 2022 and allocated over $50 billion to strengthen the US semiconductor industry. South Korea launched the K-Chips Act to provide substantial tax breaks to semiconductor companies, ensuring competitiveness. Japan offers incentives exceeding $2 billion for its semiconductor industry, while Taiwan, the world’s largest chipmaker, holding 44% of the global market share is continuously supporting its semiconductor ecosystem to remain at the forefront. These four countries have also formed Chip 4 Alliance, to secure semiconductor supply chains and mitigate risks, especially concerns related to geopolitical tensions with China.

The above discussion can help MBA aspirants prepare well for the GD Topic on Semiconductor in India. Candidates can grasp this information and put forward their viewpoints depending on the core motive of the discussion.