The future of India’s chip industry, Pg10

Key Highlights:

• NITI Aayog’s Frontier Tech Hub released a report emphasizing the national interest in developing India's semiconductor manufacturing capabilities despite significant challenges.
• India currently lacks a single fabrication unit, with the first expected in Dholera, Gujarat, by 2028, and ten more in various development stages.
• The India Semiconductor Mission (ISM) has a ₹76,000 crore corpus, largely earmarked for semiconductor fabs, component manufacturing, and design applications.
• The report recommends focusing state capital expenditure of $45-60 billion over ten years on mature, advanced, and compound nodes rather than frontier chips (3-7 nanometres).
• Geopolitical pressures and national security concerns underscore the urgent need for local semiconductor manufacturing to reduce import dependence.

Detailed Insights:

• The Union government has prioritized chipmaking due to the ubiquitous presence of semiconductors in nearly all electronic devices, including consumer gadgets and defense equipment.
• India's local ecosystem is not yet ready to meet domestic demand, with 90-95% of semiconductors currently sourced from outside the country.
• The report highlights that semiconductor fabrication units (fabs) have a long gestation period of four to five years before commencing production, requiring investment in over 50 specialized equipment and extensive talent development.
• It advocates for building sovereign design and research capabilities, fostering R&D excellence, and leveraging agentic AI for semiconductor engineering to create differentiated intellectual property.
• The upcoming phase of the India Semiconductor Mission (ISM 2.0) is expected to focus on selective depth, capital efficiency, and system-level differentiation, rather than attempting to replicate the entire global manufacturing spectrum.
• Semiconductor packaging, identified as a core production pillar, is less complex and expensive than fabrication and is crucial for rapid import substitution in high-volume domestic segments.
• Strategic partnerships with countries like the U.S., Japan, the European Union, and South Korea are deemed essential for accessing critical tools, equipment servicing, and lifecycle support.

Key Concepts Involved:

• India Semiconductor Mission (ISM): A ₹76,000 crore government initiative launched to establish a robust semiconductor manufacturing and design ecosystem within India.
• Fabrication Unit (Fab): A highly specialized manufacturing plant where integrated circuits (chips) are produced on silicon wafers through a complex multi-step process.
• Mature Nodes: Semiconductor manufacturing processes typically involving feature sizes of 28 nanometres and larger, used for cost-effective chips in applications like automotive, industrial, and IoT devices.
• Semiconductor Packaging: The final stage of semiconductor manufacturing where the delicate silicon die is encapsulated in a protective casing, providing electrical connections and thermal management.