The Union government is leaving no stone unturned in its quest to make India a major player in the global semiconductor market. The semiconductor, a cornerstone of modern electronics and a driver of technological sovereignty, has become a strategic asset for countries. India’s entry into this domain, while nascent, is marked by a clear vision and a series of strategic moves aimed at overcoming its late start and leveraging its unique strengths.
India is a late bloomer in the semiconductor industry. The US, which is a pioneer in the industry, embarked on the journey in 1947, around the time India gained independence. A global chip shortage exacerbated by the COVID-19 pandemic was an eyeopener for India’s policymakers, and they are hurrying to secure the country’s semiconductor supply chain. The chip shortage, highlighting the strategic importance of semiconductors — akin to oil reserves in defining geopolitics — highlighted the need for India to develop domestic manufacturing capabilities.
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There are several global corporations with market values in the hundreds of billions of dollars. The biggest players include Intel, Samsung, TSMC of Taiwan, and Qualcomm who have cutting-edge chip technologies that power everything from personal computing devices to global telecommunications networks, and advanced AI systems. This competitive industry is not just about the technological prowess of these companies but also about the strategic maneuvers of the nations. The United States, China, South Korea, and Taiwan lead a field marked by rapid technological advancements, supply chain intricacies, and geopolitical tensions.
Strategic partnerships and investments
India’s approach is multipronged, involving strategic partnerships with global powers like the US with which it has signed a memorandum of understanding on semiconductor supply chain, and an innovation partnership. This partnership, coupled with significant investments from global semiconductor giants such as Micron Technology and Applied Materials, underscores the international community’s recognition of India’s potential as a semiconductor hub. The government’s $10 billion incentive package to stimulate semiconductor manufacturing is a testament to its commitment to this sector.
Despite these encouraging developments, India’s semiconductor journey is not without its challenges. The complexity of semiconductor manufacturing, requiring precision at an atomic level, and the global nature of its supply chain necessitate a collaborative and sustained effort across multiple stakeholders. India’s reliance on imports for its current semiconductor needs, combined with the absence of a domestic value chain, presents significant hurdles. Furthermore, the high cost, long gestation periods associated with semiconductor manufacturing, and rapidly evolving technology demand continuous investment and innovation.
However, India is uniquely positioned to leverage several advantages. With a burgeoning electronics market and a strong talent pool in semiconductor design, India can capitalise on the growing demand for semiconductors across various sectors, including consumer electronics, automotive, and digital services. The government’s proactive stance, through policy incentives and infrastructure support, offers a conducive environment for growth and investment in this sector. The way toward this end is illuminated by potential leverage points that India must exploit with precision and foresight.
Strengthening domestic capabilities
At the core of India’s semiconductor ambition lies the imperative to build and strengthen domestic manufacturing capabilities. This entails a huge investments in infrastructure that is conducive to the ultra-clean, highly controlled environments necessary for semiconductor fabrication. Semiconductor manufacturing is notorious for its intolerance to even the minutest of impurities, necessitating state-of-the-art facilities that can uphold these stringent standards.
Fostering a skilled workforce is also very important. The intricacies of semiconductor manufacturing require a high degree of specialisation, with expertise spanning from material science to electrical engineering and beyond. India’s educational institutions and vocational training centers must adapt to this need, developing curricula and training programmes that are in lockstep with the demands of the semiconductor industry. This also means creating avenues for continuous learning and development, allowing the workforce to stay abreast of rapid technological advancements.
Investment in research and development is another pillar crucial to India’s semiconductor strategy. The field of semiconductors is one of relentless innovation, where today’s cutting-edge technology may become obsolete tomorrow. For India to not only catch up but also become a frontrunner, dedicating resources to R&D is non-negotiable. This involves both government funding and fostering a culture of innovation within the industry, encouraging both indigenous startups and established players to explore new technologies and methodologies in chip design and manufacturing.
Leveraging design expertise
India’s existing prowess in semiconductor design is a strategic asset that can be leveraged. With a rich talent pool that contributes significantly to semiconductor design, India can pivot from being a consumer to a creator in the semiconductor value chain. This design expertise can be the foundation on which India can build its semiconductor manufacturing capabilities, offering tailored and innovative solutions that cater to both domestic and global markets.
The transition from design to manufacturing, however, requires bridging gaps in the ecosystem. This includes the establishment of fabrication units that can translate India’s design capabilities into tangible products. Moreover, nurturing an environment that encourages the commercialisation of research, facilitating the transition of prototypes to production, and ensuring that designers have access to the necessary tools, funding, and infrastructure are essential steps in harnessing India’s design capabilities to their fullest potential.
Forging global partnerships
In the globalised world of semiconductor manufacturing, no country can operate in isolation. Strategic partnerships and collaborations are crucial, enabling access to technology, expertise, and markets that are otherwise beyond reach. For India, forging ties with countries and companies that lead in semiconductor technology offers a pathway to accelerate its own development in this sector.
Such collaborations can take various forms, from joint ventures and technology sharing agreements to direct investment in Indian semiconductor ventures. These partnerships can also extend to academic and research institutions, fostering an exchange of knowledge and expertise that bolsters India’s indigenous capabilities. By aligning with global semiconductor leaders, India can overcome the complexities of the semiconductor supply chain more effectively, ensuring access to critical materials, equipment, and intellectual property.
Government support and policy stability
Fueled by incentives and the Aatmanirbhar Bharat vision, India has set sights on becoming a global semiconductor player. Incentives like PLI scheme, design support, and R&D funding have luredcompanies such as Micron, but infrastructure and talent gaps persist.
The role of the government is pivotal in the country’s semiconductor quest. Beyond the initial financial incentives and infrastructural support, what the industry needs most is the assurance of policy stability and continuity. The semiconductor industry, with its long gestation periods and substantial capital requirements, operates on timelines that span decades. For investors and industry players to commit the necessary resources, they need confidence that the policy landscape will remain supportive over these extended periods.
This means that policies must not only be attractive but also predictable. The government must commit to a long-term vision for India’s semiconductor industry, with policies that are insulated from the vicissitudes of political and economic cycles. Moreover, these policies should be comprehensive, addressing not just the manufacturing end of the spectrum but also R&D, design, and education. Facilitating technology transfer, simplifying regulatory requirements, and ensuring a competitive market environment are also key roles that the government must play.
Semiconductor vision
India’s semiconductor vision is not merely about manufacturing chips; it is about securing a strategic position in the global technology hierarchy, ensuring economic resilience, and advancing national security interests. The journey is undoubtedly long and complex, with success requiring a collaborative effort from government, industry, academia, and international partners. Yet, the potential rewards—a strengthened economy, technological sovereignty, and a pivotal role in the global semiconductor supply chain—make this endeavor not only necessary but imperative for India’s future.
As India takes this road, it will need to balance ambition with strategic foresight, leveraging its strengths while addressing the inherent challenges of this complex industry. The journey towards becoming a major player in the global semiconductor industry will test India’s resolve, innovation, and ability to forge partnerships. However, with sustained effort and strategic investments, India can transform its semiconductor aspirations into reality, marking its place as a key player in the global technology landscape.