By Nantoo Banerjee
India seems to be filled with a giddy rapture as the Rs.11.12-lakh crore Tata group has ventured into semiconductor fab production by simultaneously taking up two projects – one in Gujarat and the other in Assam – to put the country on the world microchip makers’ map. The two plants will have a combined investment of Rs.1,18,000 crore. The government itself appears to be flushed with excitement as the country will soon have its own semiconductor fab production units. While the indigenously built Assam plant is expected to become operational next year, the giant Gujarat plant, in collaboration with Powerchip Semiconductor Manufacturing Corp (PSMC) from Taiwan, is likely to be in production by 2026 end.
Another plant is also expected to come up soon in Gujarat. The Murugappa group firm, CG Power and Industrial Solutions, plans to establish a Rs.7,600-crore plant in Gujarat’s Sanand in partnership with Renesas Electronics Corporation, Japan, and Stars Microelectronics, Thailand. Renesas, specializing in chips, operates 12 semiconductor facilities and is a key player in microcontrollers, analog, power, and System on Chip (SoC) products. The CG power semiconductor unit will manufacture chips for consumer, industrial, automotive, and power applications, with a capacity of 15 million per day. Incidentally, Micron Technology of the US has already begun construction on its $2.75-billion chip assembly and test facility also at Sanand. It is likely to be commissioned by the end of next year.
One reason behind the government’s excitement could be that India is finally ready to fabricate semiconductors although more than 60 years behind the world. Even Malaysia, one of the top exporters of semiconductors and electronics goods, has over 40 semiconductor companies. India is truly very late to enter this high-tech area which is dominated by countries such as Taiwan, South Korea, the US, Japan, China, Israel, Malaysia, the Netherlands, Germany and Singapore. Japan has over 100 semiconductor fabrication plants. South Korea’s Samsung Electronics, having a combined annual turnover of US$202 billion, is one of the world’s largest chip makers. NVIDIA Corp of the US, Taiwan Semiconductor Manufacturing Co, and the Intel Corporation of the US follow in terms of turnover. Samsung Electronics also manufactures a host of other digital devices for end consumers.
As of March 2024, 73 new semiconductor fabs plants were being built or planned to be built around the world, including expansions to existing facilities. These fabs are being developed using a variety of technology nodes, including 2nm, 3nm, 5nm, and 7nm. Some of the companies building these fabs include: Intel Corporation, Micron Technology, Samsung Foundry, Semiconductor Manufacturing International Corporation, and Taiwan Semiconductor Manufacturing Company. Semiconductor size – or node size – is indicated in nanometers, a unit that equals one billionth of a meter (or 0.000000001m). Chips with 14 and 10 nanometers are currently in mass production, but the industry continues to aim for smaller node sizes. The catch here is that sizes may not always be what they seem.
Tiny Taiwan is the world’s undisputed leader in semiconductor business. It produces over 60 percent of the world’s semiconductors. Over 90 percent of them are in the ‘most advanced’ category. The Taiwan Semiconductor Manufacturing Corporation is the largest producer. The People’s Republic of China is probably the most jealous of Taiwan’s massive success in chip fabrication. China’s present chip making capacity covers less than 10 percent of the country’s demand. With foreign players exiting China, the country is heavily investing in domestic chip production. However, China is unlikely to find it easy to progress in this sphere as challenges such as technological prowess and geopolitical tensions loom large, standing in the way of the country’s semiconductor ambitions. With global demand for semiconductors continuing to surge, navigating challenges and fostering collaborations will hold the key to ensure a resilient semiconductor ecosystem for the future.
Currently, the United States is having the most ambitious semiconductor production programme. In August 2022, the US government signed into law the US Chips Act, which pledged $52bn to push up domestic production of computer chips. The act provides $39 billion in incentives for domestic semiconductor manufacturing. As of last May, 80 new projects across 25 states, totalling private investments of close to $450 billion, were announced. The CHIPS Act also includes a $5 billion investment in semiconductor-focused research, development, and workforce needs. This investment comes as demand for chips to power artificial intelligence (AI) systems increases. Despite being one of the world’s largest producers of semiconductors, the US imported semiconductors from 10 countries last year, each accounting for at least five percent of the total imports. The top five countries to export semiconductors to the US, last year, were: Vietnam, Malaysia, Thailand, South Korea and China.
India has so far been entirely dependent on the outside world to meet its semiconductor requirements. Major suppliers to India include China, Taiwan, Vietnam and South Korea. The country has become a major player in terms of global semiconductor consumption. Digital India is growing fast. The exploding demand for smartphones, automotive, aviation, energy, computers and data storage innovations, among others, is propelling the country’s semiconductor consumption. The demand for chips is projected to surpass $80 billion by 2026. That is equivalent to the current turnover of the Santa Clara-based US semiconductor giant, Nvidia Corporation, known as a world leader in artificial intelligence computing.
According to India’s minister of state for electronics and information technology JitinPrasada, the country’s semiconductor industry is expected to grow more than two-fold to $109 billion by 2030, up from $38 billion in 2023. Other estimates put the figure even higher, with Inc42’s 2024 report estimating a market of $150 billion by 2030. However, these estimates raise a new concern around the availability of technical personnel to support such a high projected growth. India’s semiconductor industry is expected to face a shortage of 250,000–300,000 skilled professionals by 2027. This shortage is likely to affect various segments of the industry, including research and development (R&D), design, manufacturing, and advanced packaging. Some estimates say that India will need 1.2 million skilled people in the semiconductor sector by 2032. Much will depend on how the government handles the long-awaited business blast in this field.(IPA Service)
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