INDIA SEMICONDUCTOR CONUNDRUM

10 Apr 2024 INDIA SEMICONDUCTOR CONUNDRUM

THIS ARTICLE COVERS ‘DAILY CURRENT AFFAIRS’ AND THE TOPIC DETAILS OF ”INDIA SEMICONDUCTOR CONUNDRUM ”. THIS TOPIC IS RELEVANT IN THE “ECONOMY” SECTION OF THE UPSC CSE EXAM.

Why in the News?

Recently, Tata Electronics, a subsidiary wholly owned by Tata Sons Pvt. Ltd., is collaborating with Powerchip Semiconductor Manufacturing Corporation (PSMC) of Taiwan to establish India’s first cutting-edge semiconductor fabrication facility, integrating artificial intelligence capabilities.

About Semiconductor chips?

• A semiconductor is a substance with electrical conductivity properties that lie between those of conductors like copper and insulators like glass.
• Semiconductor chips are tiny, wafer-like devices made from semiconductor materials, typically silicon, which possess unique electrical properties. Semiconductor chips serve as the building blocks for a wide array of electronic devices, from smartphones and computers to medical equipment and automotive systems.

• The fabrication process of semiconductor chips involves intricate layers of materials and precise patterning techniques. The most common type of semiconductor chip is the integrated circuit (IC), which contains interconnected electronic components such as transistors, diodes, and resistors.

Development of Semiconductor chips in India–

• A semiconductor facility in Morigaon, Assam, will be established by Tata Semiconductor Assembly and Test Pvt Ltd (TSAT) with an investment of Rs 27,000 crore. It is expected to produce 48 million chips daily, primarily serving the automotive and electric vehicle industries.
• Another semiconductor facility in Sanand, Gujarat, will be developed by CG Power in collaboration with Renesas Electronics Corp from Japan and Stars Microelectronics from Thailand, involving an investment of Rs 7,600 crore.
• Both Foxconn and Vedanta proposed to set up a fabrication facility independently in the coming years.

Why Government is focusing on Semiconductor Manufacturing-

• Rapidly growing Market– India’s semiconductor consumption is on a swift ascent. Rajeev Chandrasekhar, the country’s Minister of State for IT and Electronics, anticipates an expansion to $110 billion by 2030.
• Import Dependence- India depends significantly on imports to meet its domestic semiconductor needs, rendering it susceptible to coercion and supply chain interruptions, particularly with China’s dominance in the global semiconductor industry. Establishing local manufacturing facilities would shield India from potential future supply disruptions and facilitate self-sufficiency.
• Strategic Significance– Semiconductors are essential components in various critical industries such as telecommunications, defence, healthcare, and automotive. As such, having a robust domestic semiconductor manufacturing capability is crucial for national security and strategic autonomy.
• High-skill Employment opportunities—Semiconductor manufacturing has the potential to create high-skilled jobs and drive economic growth through technology innovation and ecosystem development.
• Diversify Global supply chains of Semiconductor chips– Currently, chip production is centralised in a limited number of nations. For instance, Taiwan alone accounts for more than 60% of global semiconductor manufacturing, while combined with South Korea, these two countries contribute to 100% of the production.

Challenges for India-

• Huge initial investment- Semiconductor production is a highly intricate and technology-driven industry demanding substantial capital investments, enduring risks, extended periods for development and return on investment, and frequent technological advancements. These factors necessitate substantial and continuous financial commitments.
• Infrastructure deficit- Establishing a chip manufacturing ecosystem in a new area poses significant hurdles. It necessitates robust infrastructure, including a consistent power supply and ample clean water, alongside costly water purification setups. Moreover, the process involves numerous chemicals and gasses essential for chip fabrication, adding to the complexity and expenses.

• Sophisticated technology- Sophisticated technology is imperative for high-end chip manufacturing, a capability possessed by only a handful of corporations in india.

• Lack of skilled manpower- India tremendously lacks skilled human resources, which is imperative for semiconductor manufacturing.

Initiatives taken by India to promote semiconductor manufacturing-

• Modified Scheme for Setting up of Semiconductor Fabs in India- The scheme intends to draw significant investments for establishing semiconductor wafer fabrication plants within the nation. Under this scheme, there is a provision of providing 50% fiscal assistance of the project expenditure equally, specifically targeting the establishment of Silicon complementary metal-oxide semiconductor (CMOS) based semiconductor fabrication facilities in India.
• Design linked incentive Scheme– It provides monetary benefits and supportive infrastructure for semiconductor design throughout its various developmental and deployment phases. This scheme provides incentives like “Product Design Linked Incentive” and “Deployment Linked Incentive.”
• India Semiconductor Mission– It aims to spearhead the formulation of enduring strategies for cultivating a resilient semiconductor and display ecosystem. This specialised and autonomous initiative will be overseen by leading experts from the global semiconductor and display sectors. Serving as the central authority, ISM will ensure the effective and seamless execution of schemes designed to establish Semiconductor and Display Fabrication facilities.
• Semiconductor laboratory– The Union Cabinet has sanctioned the Ministry of Electronics and Information Technology to initiate the necessary measures for upgrading and commercializing the Semi-conductor Laboratory (SCL) located in Mohali. The Ministry will investigate the potential for a collaborative venture between SCL and a commercial fab partner to enhance the existing brownfield fab facility.

CONCLUSION-

Semiconductor chips are vital in modern electronics, yet India faces import dependency risks. Government initiatives like design-linked incentives and the India Semiconductor Mission aim for self-reliance and technological advancement. Strengthening domestic semiconductor capabilities is crucial for innovation, economic growth, and strategic autonomy in India’s tech-driven future.

Download Yojna daily current affairs eng med 10th April 2024

Prelims based question-

Q1. Consider the following statements about semiconductor technology:

1. Silicon is predominantly used in the fabrication of semiconductor chips.
2. Transistor is a basic building block of a semiconductor device.

Choose the correct answer using the codes given below:

(a) 1 Only

(b) 2 Only

(c) Both 1 and 2

(d) Neither 1 nor 2

ANSWER: C

Mains based Question-

Q1. What are the challenges hindering growth in India’s semiconductor sector, and what policy measures and reforms could be implemented to overcome these obstacles and foster its development?

Vikas