India's plans to build semiconductor ecosystem: Should we be excited?
India needs to create a semiconductor ecosystem to avoid being crippled by the kind of shortages that have hit industries across the globe. But is the plan sound enough this time? Let's understand
Team TMS New Delhi
![semiconductor, integrated circuit IC, chipset, technology, internet of things, electronics, mobile, smartphone, manufacturing, make in india, chips, taiwan, graphic semiconductor, integrated circuit IC, chipset, technology, internet of things, electronics, mobile, smartphone, manufacturing, make in india, chips, taiwan, graphic](https://bsmedia.business-standard.com/_media/bs/img/article/2020-09/15/full/1600114331-842.jpg?im=FeatureCrop,size=(803,452))
Reliance Jio’s much-anticipated low-cost smartphone, JioPhone Next, will now be launched around Diwali. The company has been forced to postpone the launch due to a global semi-conductor shortage.
Maruti Suzuki, the country's biggest carmaker, has said that its vehicle production in September would fall by 60 per cent due to the semiconductor chip shortage.
Among other companies hit by the shortage is M&M, which expects 20-25% drop in production in September.
And, the problem might not abate anytime soon.
According to global chip design and manufacturing companies, the shortage of chips for mobile devices will continue for at least six more months in India. And the outlook for the auto sector is also pessimistic.
Clearly, India needs to create a semiconductor ecosystem of its own. However, India's track record in this sphere has been poor. And, recent reports suggest that we might not have learnt the lesson from past failures.
A financial daily recently carried a sobering report, which said the following:
An Israel-based semiconductor foundry, Tower Semiconductor, has called for Prime Minister Narendra Modi's intervention to fast-track a government proposal for chip manufacturing.
The move comes nine months after the government floated an Expression of Interest for the project.
In the letter, the company has said that any delay on the government's part would mean that it would be unable to "stay active in the project in the near future".
A consortium of Abu Dhabi-based Next Orbit Ventures, with Tower Semiconductor as its technology partner, has pitched for a 3-billion-dollar semiconductor fabrication unit in Gujarat's Dholera.
One might get the sense that history is repeating itself.
FAB TALES FROM INDIA
In 2007, Intel showed interest in setting up a fab plant but it chose China and Vietnam due to Indian govt’s “unattractive incentives”
In 2013, Govt cleared two fab projects, one by Jaypee with an investment of Rs 26,300 crore; and another by Hindustan Semiconductor Manufacturing Corporation. Both could not show proof of funding
In 2020, Govt floated EoI inviting applications to set up semiconductor fab plants. The response is lukewarm
In 2021, the Tata group said it was mulling entry into semiconductor business
There has been some movement despite this poor track record.
In August of 2021, Tata group Chairman N Chandrasekaran announced that the salt-to-automobile conglomerate was looking to enter semiconductor manufacturing.
There is the crucial question of how much the government wants to subsidise the industry.
According to a senior executive of American chip maker incentive support of 1 billion dollars per semiconductor manufacturer could attract two to three large investments worth up to 80,000 crore rupees for setting up speciality fabrication units in India.
The executive added that the US government was offering incentive support of 50 billion dollars, South Korea 100 billion dollars, and China around 450 billion dollars.
Watch video report on semiconductors ecosystem
More From This Section
Don't miss the most important news and views of the day. Get them on our Telegram channel
First Published: Sep 20 2021 | 4:43 PM IST