Editor-DN
(This is the second article in a two-part series on the US-China semiconductor war and where India stands in it. Here is the first part)
When Chandrayaan 3 landed on the moon on August 23 last year, one place in Mohali was particularly happy: the government-run Semiconductor Laboratory (SCL). It was a personal victory for SCL’s engineers, the unsung heroes who worked for months to develop a wide variety of semiconductors critical to command and control the mission. The spacecraft uses sensors and cameras to transmit data and messages, enabling communication with Earth and using chips to navigate to the landing destination.
SCL of Mohali is India’s only leading chip manufacturing foundry. It began production in 1984, three years before the world’s largest semiconductor manufacturing company, Taiwan Semiconductor Manufacturing Company (TSMC), was founded.
However, today, while TSMC produces 90% of the world’s newest and most advanced semiconductors, or microchips, with the most expensive 5-nanometer (nm) chips in size, SCL produces only 100 nm and It can make legacy chips above that, apparently generations-old TSMC had an annual turnover of more than $70 billion last year, far more than SCL’s paltry $5 million. And while TSMC’s clients are some of the world’s leading tech firms, such as Apple, AMD and Nvidia, only ISRO (Indian Space Research Organization) is among SCL’s top clients. TSMC’s factories are state-of-the-art; SCL is in dire need of modernization and upgradation.
Tuff Luck of India
SCL could have been TSMC’s biggest rival had it not been for a very unfortunate incident, which pushed India into the semiconductor dark ages. On February 27, 1989, a mysterious fire broke out in the plant, destroying most of the facilities. To this day no one knows whether it was an act of sabotage or an accident. The factory later rose from the ashes, but by then it was far behind in the race.
Dan Hutchison of Canada’s TechInsights company, one of the world’s leading voices in the industry, surprised me when he said he had been monitoring the Indian chip industry since the 1970s. “Throughout my career I have seen India struggle for this industry. There have only been failures. India needs to succeed now.” Dan is not wrong, as India’s semiconductor history is made up of a series of broken dreams and unfulfilled promises. Several multinational companies tried their luck in setting up chip manufacturing projects, but they failed to materialize due to various reasons.
Project Micron, a sign of good things to come
After the tragedy of 1989, it took more than three decades for India to see positive developments in its semiconductor journey. In August last year, a groundbreaking ceremony was held for Micron Technology’s state-of-the-art semiconductor assembly, testing, and packaging facility in Sanand, Gujarat. Its owners claim that the facility will be operational early next year. The plant will be completed in two phases at a cost of $2.75 billion – $825 million to be invested by Micron, and the rest by the Center and the Gujarat government.
The Micron project seems to be the beginning of a bright future for the country. Since the groundbreaking ceremony last year, four new projects have been announced, the latest on Monday when the government said it had approved a proposal by Keynes Semicon to set up a semiconductor unit in Sanand. . Apart from Tata Electronics’ fab unit at Dholira in Gujarat, all the new units are testing and packaging units. Taiwan’s Power Chip Semiconductor Manufacturing Corporation (PSMC) and Tata Electronics had announced in February this year that they would set up a fabrication unit in Dholira. I am sure the government will be more than eager to see the progress of this project as it is India’s first fab unit in the private sector. Neither company has included a completion date or cost in its press statements, but according to media reports, the total project will cost Rs 91,000 crore.
India has seen many false dawns in the last few decades, but now things seem to be changing, and at a fast pace. There was a time when India couldn’t even dream of making the latest smartphone. It was a domain exclusively acquired by China. Today, India is the manufacturing hub for iPhones and other smartphone brands. Referring to this success story, Prime Minister Narendra Modi said last year, “We have successfully made India a mobile phone manufacturing hub over the past decade. Now our next goal is to make the country a leader in semiconductor manufacturing.” To be erected as
India is established in only one class.
A semiconductor manufacturing ecosystem requires infrastructure for designing, fabrication, research, testing, and packaging. In addition, it requires sophisticated equipment, minerals and gases to make chips. Although India severely lacks large-scale semiconductor fabrication facilities, it has built a strong ecosystem for chip design and related services. Major global semiconductor companies such as Intel, Qualcomm, Texas Instruments, NVIDIA, AMD and Broadcom have established major design and R&D centers in India. Indian engineers contribute to the design of highly complex chips used in cutting-edge technologies ranging from artificial intelligence to 5G networks. Companies such as Wipro, Tata Elxsi, and HCL Technologies also provide outsourced semiconductor design services, catering to global clients.
“Learn to walk before you can run”
Now, the Modi government wants India to become a manufacturing, R&D, testing and packaging hub. A tall order indeed, considering India is only at the beginning of the chip race – but not impossible. I have spoken to many industry experts from around the world in the last two years, and they believe that India can become a semiconductor hub and global player in 10-20 years if they remain as focused, patient and committed as they are. That the Modi government is visible today. .
To put India’s efforts in perspective, we must remember that it took decades for semiconductor superpowers Taiwan and South Korea to reach where they are in the race today. “Actually, it’s going to take 10 to 20 years, assuming it’s implemented well. You have to learn to walk before you run. That’s the important thing — to make sure that the Micron project Good luck,” says Hutchison, who makes the call. Micron Packaging Project “A Perfect Baby Step”. Certainly, South Korea, Taiwan, and China all started with packaging units.
Challenges of India
Chip fabrication, which allows the production of 5 nm or even 2 nm microchips, is widely believed to be the key to the success of semiconductor missions. Many things are needed before manufacturing starts after 10-15 years. This is not a simple industry. It requires a lot of work and high-end equipment and materials.
1. Investment
According to estimates by the Semiconductor Industry Association, it takes at least 10 years for a state-of-the-art manufacturing factory to produce chips. Initial investment and operating costs can run anywhere between $10 billion and $40 billion. If India dreams of becoming a Chi hub, it will have to invest heavily in this sector in the next 10-15 years. China is spending billions of dollars to become self-sufficient in semiconductor manufacturing. The US has invested more than $100 billion in its industry by 2022. Compared to these stark figures, India has managed to invest only $15 billion in its semiconductor project.
What India desperately needs is private investors and global players.
2. Gases and mineral scarcity
Semiconductor chip manufacturing mainly uses more than 150 types of chemicals and more than 30 types of gases and minerals. All of these are currently available in only a few countries. The challenge for India is self-reliance in this sector.
3. Supporting Industries
Some experts believe that India’s primary task is to build support industries for the emergence of a chip industry. The problem is related to some of the fundamentals, such as a stable power grid and constant availability of water, that make it possible to build a semiconductor industry.
4. Political will
The chip industry is capital-intensive and time-consuming, requiring deep commitment from the government and private players alike. Staying in the game requires the will of successive governments. PM Modi wants India to become a developed economy by 2047. If India is to truly become a developed country by 2047, a long-term semiconductor strategy will be required.
5. Skilled manpower
India has an abundant workforce, but lacks the kind of skilled workforce required in the semiconductor industry.
6. Brain drain
India can achieve its goal of becoming a semiconductor hub in about five to six years instead of the traditional time frame of 10-20 years if we manage to bring back home great Indian talent, serving global companies. Can we entice them with equal pay packages and benefits? Can nation-building be the impetus? Can we improve our work culture to be more professional and productive?
Taiwan’s success story owes much to Taiwanese-born executives who acquired their semiconductor skills and experiences in the United States. In the 1980s, the Taiwanese government decided to bring back its talented people to start the semiconductor industry. He gave them salaries at par with western companies. These immigrant Taiwanese played a huge role in making Taiwan a truly global chip center.
The chip revolution also began in South Korea after the government encouraged many Korean experts working for Japanese companies to return and work in Korea.
There is no dearth of Indians doing well in the semiconductor business in the US and elsewhere. About a dozen leaders of the world’s leading chipmakers are either Indian or of Indian origin. I have met a couple. They all love India. But India needs to create the right conditions to bring them back, and also stop the brain drain of young engineering graduates who are in high demand abroad.
A new dawn
India is close to signing deals with several multinational companies to launch new projects. The Modi government has recognized the fact that India needs a leading light in the semiconductor space if it is to become a major geopolitical player. What happens after the Micron factory will determine the future of India’s semiconductor industry.
(Syed Zubair Ahmed is a London-based senior Indian journalist with three decades of experience with Western media)
Disclaimer: These are the personal views of the author.
