The electronics and semiconductor chip world has evolved significantly. These chips are also called integrated circuits, or ICs. They started small but have grown extensively. In 1969, Robert Noyce, co-founder of Intel, visited India with the idea of setting up a fabrication unit for ICs. However, at that time, no one could have predicted the dominance of electronics and semiconductors in our lives today.
Today, big economies aim to produce their own semiconductor chips after the Covid-19 pandemic. They want to be self-sufficient. India is doing the same. It has launched a Rs 76,000-crore plan to build semiconductor and display factories. India aims to become a top chip innovator.
Intel has not planned a chip factory (fab) in India yet. However, top companies like Micron (US), Powerchip Semiconductor (Taiwan), and Renesas (Japan) support India’s chip-making goals. Micron is building a plant for assembling and testing chips. Powerchip and Renesas are working with Tata Electronics and CG Power. They are helping to set up a chip factory and a packaging plant in India.
But the Indian government’s efforts do not stop at fabs and testing plants. It has taken a 360-degree approach to create an ecosystem that will foster chip innovation.
The Importance of Creating an Ecosystem
Building fabs and testing plants leads to the expansion of industries. These industries use the products from fabs and plants to create finished goods. This ecosystem is crucial for India’s semiconductor dreams, as stated by Ashwini Vaishnaw, Union Minister for Electronics and IT.
When semiconductor manufacturing begins in a country, many downstream industries start instantly, like laptop manufacturing, server manufacturing, electric vehicles, automobiles, and machines used in factories where semiconductors are used, says Vaishnaw.
For instance, South Korea’s Simmtech is investing Rs 1,250 crore to support Micron’s testing plant in Gujarat. Their CEO Jeffrey Chun states that this is not their first time supporting a key customer and cites their successful collaboration with Micron in China and Malaysia as proof of the positive impact of co-location investments on semiconductor ecosystems.
Anticipating the needs of the downstream industry, Vaishnaw’s ministry is open to introducing a scheme similar to SPECS (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors). As he mentions, having manufacturers of wafer fabrication equipment (WFE) is crucial for India’s semiconductor mission. WFEs are large machinery used in the production and processing of raw wafers to manufacture chips and account for a significant portion of a fab’s expenditure.
Global Supply Chain
Danish Faruqui is the CEO of Fab Economics. He says the global supply chain for WFE is under pressure. Delivery times can take several years in some instances. Including WFE manufacturing in India’s ten-year semiconductor plan is essential. He praises India’s announcement about WFE as a brilliant move. Faruqui thinks it will play a key role in succeeding in the semiconductor industry.
India has often been criticized for copying China’s approach towards becoming a global leader in various industries. However, when it comes to semiconductors, India has taken its own unique path. With its 360-degree strategy and focus on creating an ecosystem that fosters chip innovation, India is well on its way towards becoming one of the top 5 chip makers by 2029.
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