India's growing semiconductor ecosystem in global technology landscape
India's semiconductor industry has witnessed a transformative evolution, positioning itself as a significant player in the global technology landscape. This blog navigates through the growth trajectory, key drivers, and impact of India's burgeoning semiconductor ecosystem within a technology-driven world.
The semiconductor industry is the backbone of modern technology, powering the electronic components that fuel our everyday devices like computers, phones, and cars. Its significance extends far beyond mere production; it's the catalyst for innovation that spans various industries.
For example, Consider autonomous vehicles, these vehicles' sensors and processing units depend on semiconductors for navigation, split-second choices, and passenger safety. Semiconductors enable the broad array of cutting-edge technologies that define our modern world.
India's vision to position itself as a global hub for semiconductor manufacturing marks a transformative milestone. It's not just about creating chips; it's a visionary leap towards bolstering economic prowess and spearheading technological progress. By aspiring to be a semiconductor powerhouse, India aims to pave the way for a future that reshapes how we live, work, and interact in today's elements connected digital landscape.
India's Emergence in the Semiconductor Sector
The history of India's semiconductor industry showcases a journey from primarily being a consumer to slowly evolving into a contributor and innovator within the global semiconductor landscape.
Early Stages:
In the late 20th century, India primarily relied on importing semiconductor chips to meet its technological demands. The nation's focus was more on software development and services rather than semiconductor manufacturing.
The Semiconductor Complex Limited (SCL) in Mohali, Punjab, launched India's semiconductor journey in the early 1980s. SCL, India's first semiconductor production facility, helped grow the semiconductor industry. Its main goal was to create indigenous semiconductor technology and production skills to lay the foundations for the industry's expansion in the country.
Policy Initiatives:
In the early 2000s, India began implementing policies to encourage semiconductor manufacturing. Initiatives like the Special Incentive Package Scheme (SIPS) aimed to attract investments and foster the growth of semiconductor fabrication facilities.
Evolution and Growth:
Over the years, India witnessed a gradual growth in semiconductor-related activities. This growth was largely propelled by the establishment of semiconductor design and research centers, leading to increased indigenous chip design capabilities.
Focusing on Innovation:
India's semiconductor journey transitioned from merely manufacturing chips to focusing on innovation and research. The emphasis on Research and Development (R&D) led to the emergence of indigenous designs and patents in the semiconductor domain.
The government's 2017 National Electronics Policy (NEP) aimed to make India a worldwide electronics manufacturing hub. In this comprehensive program, various strategic efforts were made to boost the semiconductor sector. These proposals included tax breaks and subsidies to encourage domestic semiconductor production. The NEP's main goal was to strengthen India's position in the global electronics market and promote semiconductor growth and innovation.
India Semiconductor Mission (ISM)
In 2021, the government rolled out the India Semiconductor Mission (ISM), a monumental $10 billion initiative aimed at nurturing a robust semiconductor ecosystem within the country. The ISM strategically targets three pivotal domains:
Chip Design: By infusing funding into Indian startups and companies, the ISM endeavors to stimulate the development of indigenous chip designs.
Chip Manufacturing: With a focus on attracting foreign investment, the ISM strives to entice global companies to establish semiconductor manufacturing facilities within India.
Semiconductor Testing and Packaging: Recognizing the significance of comprehensive capabilities, the ISM provides financial support to Indian companies to enhance their proficiency in semiconductor testing and packaging.
The India Semiconductor Mission (ISM) has wielded a marked influence on the nation's semiconductor sector. In 2021, India's semiconductor device exports surged to $219 million, elevating the country to the 29th position among global semiconductor exporters, as per the OEC report. Notably, while semiconductor devices proved significant in exports, they ranked 272nd in India's overall exported products. This data underscores a promising trajectory for India's semiconductor export prowess, signaling the initial impact of ISM-driven strategies.
In recent years, India has set its sights on becoming a major player in the global semiconductor industry. The Government of India's (GoI) announcement of the $10 billion India Semiconductor Mission (ISM) stands as a pivotal step towards this ambition. This case study delves into the strategic initiatives, such as SemiconIndia 2023, and their impact on fostering a robust semiconductor ecosystem in the country.
SemiconIndia 2023
SemiconIndia 2023 serves as a cornerstone event within the ISM framework. Inaugurated by the Prime Minister of India, this conference acts as a pivotal platform for various stakeholders in the semiconductor industry, academia, and government to converge.
Showcasing Capabilities:
The event acts as a stage to exhibit India's capabilities and advancements in semiconductor technology, demonstrating its potential to emerge as a key player in the global semiconductor market.
The focus on intellectual property and innovation within the semiconductor sector has gained significant momentum this year.
Patent Filing in India's Semiconductor Sector:
The semiconductor sector, with its rapid advancements and transformative innovations, has become a focal point for intellectual property protection through patents. Given the emphasis on fostering a conducive environment for collaboration between semiconductor industries and academia, the Government of India's efforts have also extended to incentivizing and facilitating patent filings within this sector.
- Innovation Ecosystem: ISM's mission to train 85,000 semiconductor professionals is laying the groundwork for a robust innovation ecosystem in India. The convergence of skilled talent, academic research, and industry collaboration serves as fertile ground for groundbreaking semiconductor innovations.
- Encouraging Patent Filings: The Indian government has streamlined patent filing procedures, offering support and incentives for individuals and organizations engaged in semiconductor research and development. Initiatives such as tax incentives, fast-track examination, and financial assistance promote and facilitate the filing of patents for semiconductor-related innovations.
- Intellectual Property Protection: Patent filings in India pertaining to semiconductor innovations play a pivotal role in safeguarding novel technologies and fostering a culture of innovation. These filings not only protect the intellectual property of inventors but also contribute to the country's technological advancement and economic growth.
Impact and Future Prospects:
By encouraging and supporting patent filings within the semiconductor sector, India is poised to become a hub for innovation and technological advancement in this field. The protection of intellectual property rights stimulates further research and development, attracting investments, fostering collaborations, and ultimately propelling India's semiconductor industry onto the global stage.
Government Policies and Incentives: Government's PLI Scheme for Semiconductor Production (Benefits and Challenges)
In an effort to reduce reliance on semiconductor imports and bolster domestic manufacturing, the Indian government introduced the ambitious Production Linked Incentive (PLI) scheme. The scheme offered $10 billion for the initiative incentives to companies engaged in semiconductor manufacturing, aiming to attract investments and stimulate indigenous production of chips.
Benefits of the PLI Scheme:
- Incentivizing Domestic Production: The PLI scheme offered financial incentives to semiconductor manufacturers based on their incremental sales of locally produced chips. This aimed to encourage companies to establish or expand semiconductor manufacturing facilities within India.
- Economic Growth and Employment Generation: The scheme intended to catalyze economic growth by fostering a self-reliant semiconductor ecosystem. Increased domestic production would not only reduce import dependency but also create job opportunities across the semiconductor value chain.
- Technological Advancements and Innovation: Encouraging domestic production through incentives was expected to stimulate technological advancements and innovation within India's semiconductor industry.
Challenges and Implications:
- Global Supply Chain Dynamics: The semiconductor industry operates within a complex global supply chain, and the challenges of establishing a robust semiconductor manufacturing ecosystem require significant investments and time.
- Technological Barriers: Semiconductor manufacturing involves highly sophisticated and capital-intensive processes. Establishing competitive semiconductor fabrication units demands substantial technological expertise and infrastructure, posing challenges for potential investors.
- Competition and Risk Aversion: Despite the incentives offered, global semiconductor players might exhibit risk aversion due to competition from established manufacturing hubs like Taiwan and South Korea.
Brief overview of the top companies in the context of India's semiconductor developments:
HCL (HCL Technologies): Actively discussing with Karnataka state government to set up an OSAT facility with an investment of about $400 million. HCLTech acquired Sankalp Semiconductor in 2019, which is a semiconductor design service partner for major chip manufacturers and OEMs globally.
AMD (Advanced Micro Devices): Inaugurated its largest global design center, the Technostar research and development campus, with a $400 million investment over five years in Bengaluru. The facility aims to house 3,000 engineers and focus on CPU, GPU, adaptive SoCs, and FPGA development.
Qualcomm Inc: Planning to outsource semiconductor chip manufacture to India once the country establishes its own fab plants and OSAT facilities. Eyeing growth opportunities in 5G phones, automotive software for EVs, WiFi technologies, and wireless fixed broadband solutions.
Kaynes Technology: Through its subsidiary Kaynes Semicon, entering the OSAT/ATMP services domain with an INR 28 billion investment to start a semiconductor facility near Hyderabad. Expected to create 2,000 jobs and initially assist global customers with various package types.
TATA Group: Reportedly drafting a proposal to tap into the government's semiconductor subsidy scheme and exploring overseas technology partnerships for potential involvement in chip manufacturing.
Micron Technology: Not an Indian company, but TATA Projects has secured the contract to construct Micron Technology’s advanced semiconductor assembly and testing facility in Sanand, Gujarat, spanning 1.4 million square feet. The facility will produce packaged chips, with the initial phase scheduled to commence by December 2024.
These key players, both national and international, are making significant strides or considering investments and expansions within India's semiconductor industry, contributing to the nation's goal of fostering a robust semiconductor ecosystem. And focus on nurturing and supporting the growth of AI-related technologies, particularly in chip design for AI applications, fostering a conducive environment for innovation and indigenous intellectual property development.
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