4-March-2024-Editorial

GROWTH OF SEMICONDUCTOR INDUSTRY IN INDIA

India’s move towards establishing its first semiconductor fabrication plant marks a significant milestone in its technological advancement. Semiconductor chips form the backbone of modern electronics, and domestic manufacturing holds strategic, economic, and technological importance.

What are Semiconductor Chips?

Semiconductors Definition:

• Semiconductors are materials with conductivity levels between conductors (like metals) and insulators (like glass).
• Common semiconductor materials include silicon, germanium, gallium arsenide, and others.

Functionality:

• Semiconductor chips, also known as microchips or integrated circuits, are fabricated from these semiconductor materials.
• They serve as essential components in electronic devices, enabling functions like computation, memory storage, and signal processing.

Global State of Chip Manufacturing

Dominant Players:

• Currently, countries like South Korea, Taiwan, and China dominate the global semiconductor manufacturing landscape, accounting for approximately 70% of the world’s manufacturing capacity.

Government Initiatives to Promote Chip Manufacturing in India

Incentive Scheme:

• The government has introduced a Rs 76,000 crore chip incentive scheme.
• This scheme covers incentives for every aspect of the semiconductor supply chain, including electronic components, sub-assemblies, and finished goods.
• It encompasses all three components of the semiconductor ecosystem: packaging units (ATMP facilities), assembly and testing projects (OSAT plants), and full-scale foundries.

Fiscal Support:

• The central government provides fiscal support, and state governments can offer additional incentives to attract investments.
• For instance, in the case of the Micron project, the central government and the Gujarat government contribute 50% and 20%, respectively, of the project cost.

Promoting Research and Development:

• The government plans to establish an R&D lab at the Semiconductor Laboratory to foster innovation and indigenous technological development in semiconductor manufacturing.

Significance of Chip Manufacturing Industry for India

Strategic Significance:

• Domestic semiconductor manufacturing reduces dependence on imported semiconductors, enhancing national security by safeguarding critical infrastructure, defense systems, and sensitive data from cyber vulnerabilities.

Digital Transformation:

• Semiconductor manufacturing lays the foundation for digital transformation, playing a pivotal role in advancing India’s technological capabilities.
• Chips are integral to modern electronics and are crucial for driving the fourth industrial revolution.

Economic Significance:

• Robust Supply Chains: Domestic chip manufacturing diversifies supply chains, minimizing uncertainty in chip production.
• Employment Generation: The semiconductor industry creates employment opportunities across various domains, including design, fabrication, assembly, and testing.
• Export Potential: India’s entry into semiconductor manufacturing can tap into the global market, contributing to export earnings and bolstering the country’s economic growth.
• Boost to Domestic Manufacturing: The establishment of semiconductor fabrication plants, such as the Tata-PSMC plant, supports the government’s Make in India initiative, catering to industries like high-performance computing, electric vehicles, and defense.