To cash in on next tech boom, India needs the right chips, Pg11

Key Highlights:

• India aims to become a principal player in the global semiconductor and AI economy, recognizing technology as the foundation for economic growth.
• Current initiatives like the India Semiconductor Mission (ISM), Design Linked Incentive (DLI), and IndiaAI Mission are foundational steps.
• Despite significant investment commitments of over ₹1.64 lakh crore, a structural problem exists with most approved units being low-margin ATMP/OSAT facilities.
• The focus needs to shift from basic packaging to high-margin chip design and advanced packaging, which offer 50-70% gross margins.
• Key recommendations include establishing a National Semiconductor Research Institute and a ₹1,000-crore Chip Design Commercialisation Fund.
• India possesses a large talent pool of 1,25,000 chip design engineers and programs like DIR-V for RISC-V open-source cores, positioning it well for AI inference chip development.

India's Chip.jpg

Detailed Insights:

• Nations like Taiwan, South Korea, and China have made substantial investments in semiconductor mastery and self-sufficiency, with the US passing the CHIPS Act for significant subsidies.
• India's strengths lie in its demographic scale and intellectual capital, with engineers and scientists at the forefront of global AI and semiconductor development.
• Historically, India has underinvested in technological sovereignty, risking exclusion from critical technologies due to geopolitical moves like restrictions on AI models.
• The success of the electronics Production Linked Incentive (PLI) scheme, which led to India assembling 25-28% of global iPhones, was based on supply-chain diversification.
• Semiconductors are undergoing an architectural revolution driven by AI, creating new value in compute, unlike the supply-chain diversification seen in electronics.
• While conventional wire-bond packaging yields around 6% gross margins, advanced packaging and chip design offer significantly higher margins of 25-70%.
• The AI market is bifurcated into training (dominated by Nvidia's CUDA ecosystem and custom ASICs) and inference, with the latter being wide open for innovation.
• India's IndiaAI's sovereign EIGN compute programme, defence procurement, 5G infrastructure, and a billion-user domestic market provide ready demand for inference chips.
• The National Investment and Infrastructure Fund (NIIF) model is suggested for the proposed Chip Design Commercialisation Fund to support fabless companies.

Key Concepts Involved:

• India Semiconductor Mission (ISM): A government initiative to build a robust semiconductor and display ecosystem in India, positioning it as a global manufacturing and design hub.
• Design Linked Incentive (DLI): A scheme offering financial incentives and design infrastructure support to companies engaged in semiconductor design and innovation.
• ATMP/OSAT: Assembly, Testing, Marking, and Packaging (ATMP) refers to the manufacturing process, while Outsourced Semiconductor Assembly and Test (OSAT) refers to third-party companies providing these services.
• RISC-V: An open-source instruction set architecture (ISA) that allows for the development of custom processors without licensing fees, promoting innovation.
• ASICs: Application-Specific Integrated Circuits are custom-designed chips optimized for a particular application or function, offering high performance and efficiency for specific tasks.
• CUDA: Nvidia's proprietary parallel computing platform and API that enables software to use GPUs for accelerated general-purpose processing, crucial for AI and scientific computing.