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Catalyzing semicon ecosystem – Learnings from 14th NASSCOM Design and Engineering Summit
Catalyzing semicon ecosystem – Learnings from 14th NASSCOM Design and Engineering Summit

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Insights have been taken from the session – Catalyzing semicon ecosystem from 14th NASSCOM Design and Engineering Summit with Mr. Vinod Dham

Last year, the govt. of India announced a semiconductor policy, which focused on the following key areas –

  1.  Make in India for Electronic system design and manufacturing
  2. Set up domestic chip and display manufacturing capabilities to meet India’s emerging needs in electronics
  3. Make India a global hub for chip design
  4. Develop domestic skills in semiconductors and integrated electronic packaging in making India a semiconductor skill capital

Post covid, we have witnessed a rapid growth in the demand for electronics, whether smartphones, game consoles, smart TVs, laptops and computers etc. In addition, various organisations have embarked on their digital transformations and cloud transformation journeys. Over 750 mn population is accessing internet in one form or other. In 2 decades, India has become the third largest startups ecosystem, with many vibrant startups in ER&D space, focusing on a variety of aspects such as IoT, EVs, Industry 4.0 etc. Domestic electronics production is expected to grow 5X from FY21 to FY26, with a goal to accomplish net zero imports towards the end of the decade.

The global semiconductor industry is undergoing an astonishing growth. It took the semiconductor industry 50 years to reach USD 500 bn in revenue. In the next 10 years, the industry is expected to double its revenues to over USD 1 trillion. This is fuelled by digitalisation of practically everything around us, which is further increased by the launch of electric and autonomous vehicles in the automotive industry.

The govt has introduced generous incentive packages of USD 30 bn for developing electronics ecosystem in semiconductors, systems, chip design, and upgrading SCL fab. USD 10 bn is dedicated for incentives for semicon display including semiconductor fabs, display fabs, compound semiconductor, ATMP/ OSAT, design linked incentives, modernisation of SCL. USD 7 bn are dedicated towards electronics manufacturing including PLI schemes for mobile phone, component, IT hardware, capex linked incentives for components and sub-assemblies, incentives for development of electronics manufacturing clusters. Another USD 13 bn is given for PLI schemes in adjacent sectors such as advanced chemistry cell, auto and auto components, telecom and networking, solar PV modules, white goods etc.

In addition, states are also providing incentives with respect to land, utilities, power, water etc. to increase the momentum of semiconductor manufacturing in the country. For compound semiconductors needed in LEDs and power electronics, there is a desire to set up upto 20 companies and for semicon design, significant incentives to startups are also being provided to design chips and deploy them into different systems.

 

Challenges to overcome

Semicon 5

 

  1. Need to attract credible partners for chip and display fabs – Across the globe, the industry has consolidated to a few players due to huge investment requirement. Challenge for India would be to attract credible partners to help India set up fabs by bringing in the technology, talent, tools and equipments, partnerships etc.
  1. Need for large pool of skilled semiconductor talent – India has a large talent pool in software and semiconductor design, there is a need for skilled semiconductor talent to fill the gap for domestic and global semiconductor engineers.
  2. Building the fab – Uninterrupted supply for power, water, chemicals, materials, logistics, customs and other utilities to deliver a competitive edge by not only having advanced technology but also quick throughput time across the supply chain. It takes 12-18 months to build a shell and install the required equipments and tools and an additional 12-18 months to ramp up the equipment and wafer fab to full capacity.
  3. Fill the fab – High volume products – Utilization of over 90% of the fab is a necessity to stay cost competitive. High volume products which are in growing demand and those which enable rapid learning curve would be a good fit in the initial phase. Each of the wafers that get produced must yield over 95%.
  1. Domestic R&D – Cross licensing of intellectual property developed by other players in other countries. To be able to participate in this type of cross licensing with other players, India needs to build its domestic R&D capability for developing new types of IP for cross-licensing without extra payment.

 

While there are challenges but we as a country have also made great strides since the semiconductor policy was announced. These include

  • 3 offers to set up fabs
  • 2 offers to set up display fabs
  • 2 offers for packaging
  • 16 offers for designs of chip
  • Set up of techno-financial advisory groups for due diligence on the offers received
  • Working groups to address semicon design proposals
  • Separate working group to prepare roadmap for semiconductor talent development

While the road is long, great strides have been made and we are moving in the right direction of becoming a key player in semiconductor manufacturing.


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Vandhna Babu
Principal Analyst - Research

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