India Invests $18 Billion to Build Semiconductor Manufacturing Powerhouse

Given the intense competition and its late entry into the race to produce the most cutting-edge chips, India’s chances of becoming a big player in the global chip industry are slim. A worldwide competition for semiconductor self-reliance started in 2022 when the United States limited exports of its sophisticated AI chips to China in an effort to limit Beijing’s access to cutting-edge technology.

It presented an opportunity for India, which aims to diversify its electronics industry away from China, secure chips for vital industries, and lessen its reliance on imports. Despite being one of the biggest electronics users in the world, India has no domestic chip manufacturing and contributes very little to the global supply chain.

The “Semiconductor Mission” in New Delhi seeks to alter that. The goal is audacious. It seeks to establish a whole supply chain in India, including design, manufacturing, testing, and packaging.

India has Approve 10 Semiconductor Projects Till Now

Ten semiconductor projects totalling 1.6 trillion rupees ($18.2 billion) in investment have been approved by the nation as of this month. These consist of many testing and packing facilities as well as two semiconductor production facilities. Global chip design businesses currently utilise a reservoir of engineering talent from India.

However, experts claim that the talent pool and investments are insufficient to realise India’s chip aspirations and that progress has been uneven thus far. India needs a large number of fabs or ATP facilities, or “shiny objects”. As the vice president for global innovation policy at the Information Technology and Innovation Foundation, a think tank focused on science and technology policy, Stephen Ezell stated that India requires a dynamic, deep, and long-term ecosystem.

Leading semiconductor manufacturers, according to Ezell, take into account “as many as 500 discrete factors” before making multibillion-dollar fab investments. India needs to improve in a number of sectors, including talent, taxation, commerce, technological policy, labour rates, regulations, and customs rules.

Indian Govt Adding New Element to its Chip Ambition

The Indian government expanded its chip goal in May by implementing a plan to boost the production of electronic components, which would alleviate a significant bottleneck. Since there are so few companies in India that manufacture electronic components, such as phone cameras, chipmakers have not yet seen any local market for their product.

However, by providing financial assistance to businesses that manufacture active and passive electronic components, the new strategy opens up a possible domestic buyer-supplier base that chip makers can access. The nation also changed course in 2022 from offering better incentives to manufacturing facilities producing chips with a size of 28 nm or less.

The smaller the chip, the better the performance and the more energy-efficient it is. By cramming more transistors into the same area, these chips can be utilised in cutting-edge technologies like quantum computing and superior artificial intelligence.