Current Affairs 2022: Semi-Conductor Mission in India

Current Affairs 2022: Semi-Conductor Mission in India

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Updated on Mar 15, 2022 23:00 IST

By Tanieya Kumari

India’s Semiconductor Mission 2021 was recently launched by India to deal with the shortage of semi-conductors faced by the country. Read here in detail about the mission.

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Semi-Conductor Mission

Semiconductors are the backbone of the modern electronics industry and information and communications technology products. These materials can change their conductivity based on the environment like silicon or germanium, gallium, arsenide or cadmium selenide. Thanks to semiconductors we can do most of our works, from operating Acs, fridges to automobiles and even the device that you are reading this article on. The Covid- 19 pandemic and increasing digital work scenarios have given a push to the increasing demands of electronics devices, gadgets and essential medical devices. The manufacturing of these devices demand a similar bulk of chips, which then resulted in the most heard term nowadays ‘chip shortage.’ A large portion of the manufacturing and supply of semiconductors are concentrated in a handful of countries including China, the US, Taiwan, South Korea and Japan. However, the pandemic and subsequent lockdowns forced to shut these crucial chip manufacturing industries. To curb this situation, the Indian government has initiated the Semiconductor Mission to accelerate the development of the chip and display industry.

Currently, India imports all the chip demands with a market of $24 billion now and is estimated to touch $100 billion by 2025. With the acknowledgement of the strategic significance of integrated circuits or chips to a modern economy, the government decided to establish its semiconductors manufacturing units. The Union Information Technology Minister Ashwini Vaishnav launched the India Semiconductor Mission on December 29, 2021. This would require a lot of investment and hence, the Union Cabinet has also allocated an amount of $10 billion, approximately 76,000 crores to support the development of a ‘semiconductors and manufacturing ecosystem.’

Under the scheme, the companies that are interested in developing the semiconductors and display manufacturing ecosystem in India can start applying for the same from January 1st, 2022. Some of the top-notch companies such as TSMC, INTEL, SAMSUNG, AMD, etc. are invited to set up their industries and make India a hub of semiconductor manufacturing. One of the greatest names in the technology industry, TATA, has also shown interest in investing around $300 million in the same. This will also lead to a production of around 1, 35,000 jobs which will be a boon for the economy. India has also launched the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) under which a budget of 3,285 crores has been presented for over a period of eight years for manufacturing of electronic components and semiconductors.

As we know there is no rose without thorns, the challenges associated with this mission are as huge as well as the outcome. First of all, semiconductors and display manufacturing is quite a complex and technology-intensive sector that requires huge capital investments but the level of fiscal support envisioned by the government is infinitesimal in comparison to the scale of investments. The Indian minds have a decent chip design talent but failed to build up any chip fabrication plant (fab foundry). Also, a semiconductor fabrication facility will cost multiples of a billion dollars to set up even on a small scale and the scheme only intends to give 50% of the cost of setting up at least two Greenfield semiconductor fabs, after which nothing much is likely to be left to support the other elements such as the display fabs, packaging and testing facilities and chip design centres. The requirement of an extremely stable power supply, a lot of lands, a highly skilled workforce along a requirement of millions of clean water makes this a resource inefficient sector.

For the development of such critical and emerging technologies, multilateral cooperation is a must and the Quad Semiconductor Supply Chain Initiative is a good jumping-off point. However, the future chip production should not be fixed to only one unit and must develop an ecosystem from design to fabrication, to packing and testing. The technology sector should improvise research and development in this sector Indian Public Sector Enterprises should be actively taking part in setting up a semiconductor fab foundry with the help of a global major.

Being a major consumer of technology-aided products, it is not a wise thing to be entirely dependent on global supply chains for something as critical as semiconductors. The Union Cabinet’s decision to establish India’s Semiconductor Mission helmed by ‘global industry experts’ for the sustainable development of the chip and display industry is a step in the right direction.

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