India’s nascent chip industry has a lot of catching up to do

Bengaluru: For all the splash India has been making about riding the semiconductor revolution, its foray this far remains rather weak and limited, say industry stakeholders. Despite the production-linked incentive and design-linked incentive offered by the government, the industry is fraught with gaps in technology, talent pool and sourcing of raw materials.

“The biggest challenge for India is to stabilise the manufacturing economy. We expect that the next phase of funding from the central government, under the India Semiconductor Mission, offering incentives for semiconductor manufacturing, to get approved in the next couple of months,” said Ashok Chandak, president, India Electronic Semiconductors Association (IESA).

Chandak is not alone in his worries. Other industry observers DH spoke to agree that India needs to ramp up its focus on manufacturing and design to catch up with global players in the sector. 

“There is a global shortage of professionals in this industry and since India did not have a manufacturing ecosystem so far, we will have to train more professionals for the upcoming semiconductor manufacturing plants. However, we have good enough engineers when it comes to chip designing,” said Dr. Satya Gupta, president, Very Large Scale Integration (VLSI) Society of India - a semiconductor think tank.

Amarjeet Singh Tak, Head - Research Microscopy Solutions, Zeiss India, however, suggests India look outwards to attract global talent, tweaking immigration policies to enable that.

As for quality, where India is lagging is in being able to deliver more evolved products - complexities in chips. “We are designing chips for global companies which are good but we still don’t have many Indian companies designing complex chips. While the quality is good, we are still behind when it comes to complexity because it requires a huge investment. Indian companies like Larsen & Turbo and Tata have started working on it, but they will take some time,” Gupta pointed out.

The other crippling factor is the country’s heavy dependence on countries like China, Taiwan, South Korea and Singapore for sourcing polysilicon, silicon and other raw materials, as evidenced by data with the International Trade Administration. Then again, industry experts argue that all major countries remain interdependent for materials needed to make chips. This is not going to change soon and is not a detrimental factor. Instead, they urge India to focus on targeted incentives for manufacturers, while pursuing partnerships with countries that produce the raw materials. 

“Additionally, investments in advanced technology and research are needed to develop alternatives that reduce reliance on imports. Diversifying the supplier base and forming strategic alliances will also enhance supply chain resilience, safeguarding the industry from global disruptions,” highlighted Shetal Mehta, Co-Founder, Suchi Semicon.

To date, under the India Semiconductor Mission, the government has already flagged off five chip production units -  three of which (Micron Technology, CG Power in partnership with Renesas Electronics Corporation, Japan and Stars Microelectronics, Thailand and Kaynes Semicon) are coming up at Sanand, Gujarat, a fourth (Tata Electronics Private Limited in partnership with Powerchip Semiconductor Manufacturing Corp, Taiwan) in Dholera, and Tata Semiconductor Assembly and Test Private Limited in Morigaon, Assam.