2024 is the year when India's push for indigenous design and production of tiny electronic chips that power each and every modern electronic device be it mobile phones, laptops, smart televisions, modern automobiles or high end fighter jets started to bear fruit. Indian industry, particularly automakers faced acute shortage of microchips during the global Covid-19 pandemic and supply chain disruptions caused by the war in Europe, which resulted in suspension of their production at times. It prompted the government to urgently change the policies to attract foreign investment and technical know-how in the sector to reduce its dependence on imports.
Stung by the country’s reliance on imports to meet its semiconductor requirements during the Covid-19 period, the Government of India has launched a new scheme called Design Linked Incentive (DLI) scheme as early as December 2021 but it took time to take root as the government kept updating the policy space to boost the investment in the sector and followed the DLI scheme with modified schemes for setting up display fabrication and semiconductor plants in the country.
The government estimated that the global semiconductor market was valued at around Rs 35 lakh crore in 2020 with the expectations to grow to Rs 49 lakh crore in 2025. The government also noted that though India has a top talent pool of chip design engineers accounting for 20 percent global manpower pool and the size of domestic electronics design market was Rs 35,000 crores in 2020 but revenue of domestic chip design companies was less than Rs 150 crore in that year. Moreover, most of the intellectual property rights created by Indian talent did not belong to the country as it was held by foreign companies who were getting the design work done in India.
Booster shot to indigenous chip design and manufacturing
Year 2024 for the country’s semiconductor and chip design and manufacturing sector started on a good note as the government approved a MoU between India and the European Commission on working arrangements on semiconductors ecosystems under the framework of EU-India trade and technology council.
In February this year, two more semiconductor design startups – Saankhya Labs and Sensesemi Technologies joined the government’s design linked initiative and the government also signed MoU with future labs under six verticals such as automotive, compute, communication, and strategic electronics, industrial electronics-internet of things (IoT) and design and innovation.
However, the big boost to India’s semiconductor manufacturing came later that month when on February 29, the Union Cabinet approved three semiconductor units under Development of Semiconductors and Display Manufacturing Ecosystems in India. These included semiconductor plants in Gujarat and one in Assam.
The Union Cabinet gave approval to Tata Electronics Private Limited to set up a semiconductor fabrication unit in partnership with Powerchip Semiconductor Manufacturing Corp (PSMC) of Taiwan in Dholera, Gujarat with an investment of Rs 91,000 crore. Taiwan's PSMC is known for its expertise in logic and memory foundry segments and has 6 semiconductor foundries in Taiwan.
This semiconductor foundry will produce microchips with 28 nm technology which will be used in electric vehicles (EV), telecom, defence, automotive, consumer electronics, display and power electronics sectors.
The Cabinet also gave go ahead to Tata Group’s another company - Tata Semiconductor Assembly and Test Pvt Ltd (TSAT) to set up a semiconductor unit in Morigaon, in north-eastern state of Assam with an investment of Rs 27,000 crores. This unit will produce flip chips and ISIP chips with a capacity to produce 48 million chips per day which will be used in automobiles, electric vehicles, consumer electronics, telecom, and mobile phones etc.
The third Cabinet approval was for specialized ATMP chips for consumer, industrial, automotive and power applications. As per the approval, CG Power, in partnership with Renesas Electronics Corporation, Japan and Stars Microelectronics, Thailand will set up a semiconductor unit in Sanand, Gujarat with an investment of Rs 7,600 crore. Japan’s Renesas operates a dozen semiconductor foundries and focuses on specialized chips in the field of microcontrollers, analog, power, and system on chip (SoC) products. This semiconductor foundry in Sanand, Gujarat will produce 15 million chips per day.
These three investments came on the back of US based chip manufacturer Micron’s decision to build a 1.4 million square foot semiconductor facility in Sanand Gujrat. Nasdaq listed Micron Technology Inc in June 2023 announced investment of over $825 million in Sanand factory while total investment in the project with partner governments was estimated to go to over $2.6 billion.
Micron will assemble both dynamic random access memory (DRAM) and (Not And) NAND chips at the Sanand plant.
While DRAM chips are used as the main memory in a computer, storing data that the processor needs to access quickly while running applications or operating systems, NAND flash memory is used in USB drives, SSDs (Solid State Drives), memory cards for cameras and smart-phones and other storage devices that require non-volatile memory.
Semicon India 2024
In order to attract investment in India’s semiconductor sector, the government started hosting Semicon India, a strategic industry event, from 2021 and the third edition of the event was hosted in September this year. Prime Minister Narendra Modi announced in Semicon 2024 that the country was able to attract an investment of Rs 1.5 lakh crore in the sector in a very short span of time and many more projects were in pipeline.
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