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ROLE OF SEMICONDUCTORS IN INDIAN CHIP MANUFACTURING Semiconductors - Redefining the Indian chip manufacturing landscape

Nov 4, 2022

Technology would not be imaginable without semiconductors, also known as integrated circuits (ICs) or microchips. They play an integral role in the fabrication of electronics like phones, computers, automobiles, planes, medical instruments, military weapons, home and kitchen appliances, solar cells, etc, as they craft the existence of electronic devices and enhance the compactness and power of these devices while also diminishing their price. This Cover Story explains the role of semiconductors in India and how vital they are for sustaining state-of-the-art technology. A read on… - Anamika Mani, Assistant Marketing Manager, BDB India

India’s move to join the worldwide chip manufacturing rush is probably going to be its greatest industrial policy trick in quite a while. India is poised to be the second-largest market in the world from the perspective of scale and growing demand for semiconductor components across several industries and applications. Such government-directed policy intervention no longer exists in use ever since free trade has caught up and moved on. Chips, or incorporated circuits engraved on silicon wafers, are at the core of each sort of assembling industry, from autos to telecom gear, and from protection hardware to solar-powered chargers. They will become even more so in a world of Artificial Intelligence and electric cars, which need many more chips than gasoline-powered ones.

It has now gotten back in the game as the supply disruption in COVID-Ukraine has made each significant economy aware of key weaknesses and vulnerabilities. The situation would turn around if the conflict between China and Taiwan took over, which would affect Taiwan, which accounts for more than half the global chip supply. The decision is crucial because international fabrication businesses are becoming increasingly interested in the government’s recently announced semiconductor policy, which has offered them alluring financial incentives to establish at least two fabrication operations in the country.

What are semiconductor chips?

Semiconductors are materials that have a conductivity between that conductors & insulators. They can be pure elements, silicon or germanium or compounds, gallium, arsenide, or cadmium selenide. They are the basic building blocks that serve as the heart and brain of all modern electronics and information and communications technology products. These chips are now an integral part of contemporary automobiles, household gadgets, and essential medical devices such as ECG machines.

Manufacturing ecosystem in India

India is one of the leading centres for global semiconductor design companies. Due to India’s exceptional semiconductor design talent pool, which comprises up to 20% of the world’s semiconductor design engineers, and the large number of design patents and IPR registered in India, the majority of international semiconductor design companies have established design R&D innovation centres in India. Semiconductor manufacturing, which is crucial to meet the strategic needs of the country, has attracted interest from global companies as a good number of applications have been received under Semicon India programme.

An intricate ecology is required for chip manufacturing. You need the equipment that will be used in factories, which is a Japanese strength, the photolithography machinery that will be sed to photo-print circuits on silicon wafers, which is a Dutch specialty, and the raw materials that will be used to make the final product, such as neon gas and palladium, which have historically been supplied in the largest quantities by Russia and Ukraine. China moved early to procure some rare earths and minerals, to counter which the US has corralled 10 other countries into a minerals security partnership. India has been excluded. The scheme for setting up Semiconductor Fabs in India provides fiscal support to eligible applicants for setting up Semiconductor Fabs which is aimed at attracting large investments for setting up semiconductor wafer fabrication facilities in the country. Following fiscal support has been approved under the scheme.

The scheme for setting up, Display Fabs in India provides fiscal support to eligible applicants for setting up Display Fabs which is aimed at attracting large investments for setting up TFT LCD / AMOLED-based display fabrication facilities in the country. The scheme provides fiscal support for up to 50% of project costs, subject to a ceiling of ₹12,000 crore per Fab.

The main application of semiconductor devices, which are necessary for a wide range of electronic products, is the primary use of semiconductors. Semiconductor devices are the replacement for vacuum tubes in practically all applications because they conduct electric currents in the solid state rather than as free electrons across a vacuum.

The diode, which functions as a one-way valve in a circuit and only permits the flow of current in one direction, is one of the most widely used semiconductor components. Conversely, conductors allow current to flow in both directions. Semiconductors are also used in the design of transistors, which are used both for fast switching and for current amplification.

Driving production

Developing domestic semiconductor production will have a multiplier effect on several economic sectors and play a vital role in the achievement of a $1 trillion digital economy and a $5 trillion GDP by 2026. The programme will assist India to attain self-sufficiency, enhancing data security, and establishing digital independence in addition to boosting semiconductor production.

The making of a semiconductor chip involves some technological wizardry. The process starts with a common material, like sand, and finishes with advanced circuitry made up of many transistors, such as a microprocessor capable of executing hundreds of millions of instructions per second. To accomplish this, while constantly cutting the cost of a transistor or other basic electrical components, the semiconductor industry works on separate steps like silicon plant, water fabrication, testing, and assembly for developing a perfect chip.

Applications for semiconductors

  • Consumer electronics: Semiconductor components like integrated chips, diodes, and transistors are used to power devices like mobile phones, computers, game consoles, microwaves, and The reason there are currently such significant wait times for many consumer electrical items is in part due to the enormous demand for these products.

  • Embedded systems: Embedded systems are small computers that form part of a larger. They enable user engagement and have control over the device. Central heating systems, digital watches, GPS systems, fitness trackers, televisions, and engine management systems in automobiles are just a few examples of embedded systems that we frequently utilise.

  • Thermal conductivity: Because some semiconductors have a high thermal conductivity, they can be employed in some thermoelectric applications as a cooling.

  • Lighting and LED display: Some semiconductors can create light and are utilised in LEDs and OLEDs. Typically, these semiconductors are liquid or amorphous and are available as thin-coated films.

  • Solar cells: Silicon is also the semiconductor that is most frequently utilised in the manufacture of solar panel cells.

The physical and chemical properties of semiconductors make them capable of designing technological wonders like microchips, transistors, LEDs, solar cells, etc. The microprocessor used for controlling the operation of space vehicles, trains, robots, etc, is made up of transistors and other controlling devices that are manufactured from semiconductor materials.

Semiconductor components sourced by India

The estimated $119 billion semiconductor market in India will increase to $300 billion by 2026 at a compound annual growth rate of 19%.

How is India defining space?

The chip-making gambit is part of a larger, incentive-based push into the electronics industry. The early success in manufacturing mobile handsets has given it a boost. It has to be seen if it can be successful in producing display units (for laptops, handsets, etc), another priority area. The automotive industry and several smartphones employ mid-range processors (28 nm), which chip manufacturers considering setting up shop in India may want to consider as well.

The argument between a full-spectrum approach and specialisation is inevitable. The nation has advantages in the labor-intensive portion of chip manufacturing as well as strengths in chip design (assembly, testing, and packaging). Additionally, it might perform well in the assembly ofdownstream products like mobile phones. Some component or sub-assembly makers might invest here to feed assembly lines. In time, an ecosystem could develop with global linkages.

The Indian government has started to make efforts to attract foreign companies to set up semiconductor manufacturing units in India. As part of the ‘Make in India’ initiative, India is also finalising plans to mass-produce semiconductor chips. Recently, the government unveiled a ₹76,000 crore package for the development of India’s semiconductor and display manufacturing ecosystem, including ₹2.3 lakh crore in incentives to position India as a global hub for electronics manufacturing, with semiconductors serving as the foundational building block.

Looking ahead

Developing domestic semiconductor production will have a multiplier effect on several economic sectors and play a vital role in the achievement of a $1 trillion digital economy and a $5 trillion GDP by 2026. The programme will assist India in attaining self-sufficiency, enhancing data security, and establishing digital independence, in addition to boosting semiconductor production.

The Vedanta–Foxconn joint venture has said it will begin production with 28 nanometre (nm) chips, focusing on the consumer electronics and mobile devices markets. Vedanta is a vastly diversified Indian multinational company that has a prominent presence in the power generation, mining, oil, and gas sectors. It has revenues of over $20 billion. Hon Hai Technology Group, also known as Foxconn internationally, is a Taiwanese multinational electronics manufacturer ranked 22nd in the 2021 Fortune Global 500. Vedanta-Foxconn’s ₹1.54 lakh crore proposed investments to set up semiconductor manufacturing plants in Gujarat will create a significant impact to boost economy and jobs.

The government has received proposals worth $20.5 billion from five companies for setting up semiconductor and display fabrication units. Vedanta was the first to hop on. A joint venture of Vedanta and Foxconn, a consortium led by Abu Dhabi-based Next Orbit Ventures and IGSS Ventures of Singapore are the three companies that submitted applications for semiconductor plants. Applications have been received for setting up 28 nm to 65 nm fabs with a projected investment of $13.6 billion. They have sought support from the Center to the tune of $5.6 billion.

The process to ease manufacturing in India

  • Infrastructure is essential to supply chain strategy and must include production and quality control as well as capacity planning, logistics, and manufacturing. A proper supply chain, political assistance, and finance are essential components needed for semiconductor manufacturing. As supply chains recover, businesses will invest in digital infrastructure that enables easy communication and transactions in real-time.

  • Power semiconductors: The creation of designs for automotive, industrial, or consumer applications is made easier by System Basis Chips (SBCs) and Power Management Integrated Circuits (PMICs), which also prolong battery life and reduce power dissipation. Integrated and reasonably priced controllers will address the full spectrum of AC-DC power conversion applications, and linear voltage regulators will maintain output voltage while supporting a wide range of voltages, including solutions for optimised power consumption and incredibly small design.

    Power semiconductors are built differently from regular semiconductors, enabling them to endure high voltages and large currents without being harmed. Because they can transmit energy over great distances with little loss, they are crucial for the effective and sustainable use of energy.

  • Clean Energy: The government’s promotion of significant participants in the energy industry as well as the establishment of start-ups with a focus on renewable energy sources are two factors that have contributed to India’s recent experience with one of the fastest-growing solar PV industries. India is a crucial market for efficient PV inverters because it is home to five of the ten largest solar projects currently being built worldwide.

    Over the past 10 years, wind energy and solar PV installations have grown at an unheard-of rate as governments compete to create dependable and long-term sustainable substitutes for fossil fuels. Devices based on silicon carbide (SiC) and gallium nitride (GaN), according to power semiconductor manufacturers, will be the key to overcoming a major barrier to the expansion of renewable energy as they provide scalable power conversion and storage solutions.

  • Water: The production of semiconductors uses a lot of water for a range of tasks, such as wafer surface cleaning and equipment. In these phases, ultrapure water is necessary since it is used for chemical mechanical planarisation, solvent processing, and surface cleaning. All fabs use a lot of UPW (Ultrapure water); the International Technology Roadmap for Semiconductors (ITRS) (2011) estimates that device fabs use seven liters/cm2 per wafer out. This indicates that a typical 200 mm wafer fab can utilise up to 3,000 m3 of UPW (Ultrapure water) per day while processing 20,000 wafers each month. That is the same amount of water that a town of 20,000 people would need each day. Thus, the transformation of unpurified water from raw water is an important and complex process.

The semiconductor value chain is interrelated and linked with several industries, governments must develop policies that address all the crucial characteristics in the long run. Government policies should also focus on assuring and securing access to foreign technology suppliers through trade and foreign policy to ensure a global level of collaboration.

Government initiatives

Government is very focused on its important objective of building the overall semiconductor ecosystem and ensuring that it, in turn, catalyses India’s rapidly expanding electronics manufacturing and innovation ecosystem. The vision of Aatmanirbhar Bharat in electronics and semiconductors was given further momentum by the Union Cabinet, chaired by the Prime Minister of India, approving the Semicon India programme with a total outlay of ₹76,000 crore for the development of the semiconductor and display manufacturing ecosystem in our country. The programme aims to provide financial support to companies investing in semiconductors, display manufacturing and design ecosystem. This will serve to pave the way for India’s growing presence in the global electronics value chains.

India Semiconductor Mission (ISM) has been set up as an independent business division within Digital India Corporation with administrative and financial autonomy to formulate and drive India’s long-term strategies for developing semiconductors, display manufacturing facilities, and the semiconductor design ecosystem. Envisioned to be led by global experts in the Semiconductor and Display industry, ISM will serve as the nodal agency for efficient, coherent, and smooth implementation of the schemes. The vision of ISM is to create a thriving ecosystem for semiconductor and display design and innovation so that India may become a major player in the world of electronics production and design. The ISM is crucial for coordinating efforts to promote the semiconductor and display industries in a more systematic, targeted, and all-encompassing way. In collaboration with government ministries, departments, agencies, businesses, academia, and the semiconductor industry, it will develop a thorough long-term strategy for the development of semiconductor manufacturing facilities, display manufacturing facilities, and the semiconductor design ecosystem in the nation. Through a safe supply chain for semiconductors and displays, that includes raw materials, specialised chemicals, gases, and production equipment, it will be easier for people to embrace trusted electronics.

Image Gallery

  • Semiconductor wafer

  • Semiconductor application in India

  • The estimated $119 billion semiconductor market in India will increase to $300 billion by 2026 at a compound annual growth rate of 19%

  • The main objective of building overall semiconductor ecosystem ensures that, it in-turn catalyses India’s rapidly expanding electronics manufacturing and innovation ecosystem

  • Anamika Mani

    Assistant Marketing Manager

    BDB India

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