India’s Chip Industry: From Stalled to Successful

India’s semiconductor journey, long stalled on the global silicon highway, has finally taken off with great momentum. The Indian government’s `76,000 crore incentive fund under the India Semiconductor Mission (ISM), launched in December 2021, is now reaping rewards. In less than three years, five major semiconductor projects have received approval for central and state government incentives. These projects include four chip packaging plants and one chip fabrication unit, all of which are expected to become operational between 2025 and 2027.

As phase one of ISM concludes, experts are already looking ahead to phase two. The second phase is expected to focus on forging partnerships with global semiconductor leaders, expanding the ecosystem for essential raw materials like chemicals and gases, and addressing the need to develop skilled talent for the growing industry.

The Growing Ecosystem: Domestic and Global Collaboration

In a major boost to India’s semiconductor ambitions, global giant Micron has greenlit a $2.75 billion assembly, testing, marking, and packaging (ATMP) unit in the country. This announcement has been quickly followed by domestic heavyweights like the Tata Group, Murugappa Group, and Kaynes Semicon, all of which have put forth proposals for semiconductor manufacturing and assembly units. This wave of investments signals to the world that India’s semiconductor ecosystem is not only growing but is also open for business.

According to Pankaj Mohindroo, Chairman of the India Cellular and Electronics Association, the involvement of companies like Tata Electronics and Kaynes Technology shows India’s serious intent to become a global semiconductor player. “We’ve laid the groundwork for semiconductor manufacturing. This is a great start, but it’s only the beginning of a long journey,” said Mohindroo.

Joint Ventures: The Path to Overcoming Barriers

Nivruti Rai, managing director and CEO of Invest India, emphasized the importance of joint ventures between global and domestic partners to overcome the capital-intensive barriers associated with semiconductor manufacturing. Rai believes that these collaborations will facilitate much-needed technology transfers and help foster innovation in niche technologies like MEMS and sensors.

She also highlighted the need for government support for local suppliers of raw materials. Ensuring these suppliers can compete globally requires adequate capital aid, particularly in areas like chemicals and gases crucial to semiconductor production.

Government Support for Indigenous Innovation

To ensure the long-term success of India’s semiconductor mission, Pankaj Mohindroo has called for more direct government support for indigenous product design and IP development. “Investments in EDA tools, IP libraries, and R&D incentives are crucial for developing India’s own semiconductor design capabilities,” he noted.

The Indian government is already considering extending incentive periods and offering additional benefits, such as long-term low-interest-rate loans, in the upcoming phase of the ISM. Building a robust semiconductor ecosystem will also involve nurturing the full supply chain, including manufacturing tools, sub-assemblies, and components.

Ancillary Ecosystem: The Key to Success

Shashwath TR, co-founder of Mindgrove Technologies, has emphasized that the success of new mega-plants in the Sanand-Dholera region will depend on the development of a strong ancillary ecosystem. This ecosystem will be critical for supporting the manufacturing plants as they begin production in the coming years.

Similarly, Sandeep Kumar, CEO of L&T Semiconductor, advised that India should not solely focus on high-value semiconductor products. Instead, the country should aim to scale up production volume to compete with global giants like Nvidia and Intel. Kumar remarked, “The challenge isn’t just creating superior products. It’s about the entire ecosystem — sales, branding, and customer trust — that established players possess.”

Skilled Talent: A Vital Resource for Success

A common thread among experts is the need for a skilled workforce to support India’s semiconductor ambitions. Ajit Manocha, President of SEMI, pointed out that India’s large, English-speaking population will make it easier to train and re-skill graduates in semiconductor technologies. Workforce development programs, scholarships, and partnerships between industry, academia, and government will be key to closing the talent gap and ensuring the country has a pool of skilled professionals to drive the industry forward.

Conclusion: A Long Road Ahead, but a Promising Future

India’s semiconductor industry has taken crucial steps toward becoming a global player, but the journey has only just begun. With more investments, government support, and a focus on developing the ecosystem, India is positioning itself to be a key player in the global semiconductor supply chain. As phase two of the India Semiconductor Mission looms on the horizon, the focus will be on creating partnerships, nurturing local innovation, and building a highly skilled workforce to support the industry's rapid growth.

The road ahead may be long, but the progress so far suggests that India is ready to take its place in the global semiconductor race.

Courtesy by: economictimes