India’s semiconductor mission can do with a bit of clarity

While addressing the Gujarat SemiConnect event held recently at Gandhinagar, S Krishnan, Secretary, Ministry of Electronics and Information Technology (MeitY) presented a bird’s eye view of progress made in the India Semiconductor Mission (ISM) Phase-1, and what the Phase-2 is likely to target. 

Broadly, there were three main dimensions to the mission launched on December 15, 2021. One was the policy which offered incentives for chip fabrication units (fabs), chip packaging units (OSAT/ATMP), display fabrication units, and chip design provided the applicants met certain technological and financial criteria. Second was the outlay, which was Rs 76,000 crore. The third was that an organisation by the same name (ISM) was created to oversee their execution.

There seems to be no official document or notification on how the phase-1 outlay was further allocated; however, as per Krishnan, it had three main components — about Rs 65,000 crore to provide up to 50 per cent incentives for approved fab and OSAT/ATMP investments, Rs 10,000 crore to modernise the SemiConductor Lab (SCL) at Mohali, and Rs 1,000 crore for design-linked incentives. 

The total investment in the five units approved so far under the first component is ‘almost Rs 1.5 lakh-crore’. Krishnan said that “we have committed more than ₹60,000 crore to the five major semiconductor units which are currently under construction”, and hinted at the possibility of one or more further approvals using, what as per his claims will be, the remaining Rs 5,000 crore.

The upcoming phase-2 will also have policy and outlay, but given that we are already more than three years into the efforts, the ISM should now be viewed in its totality, for which there will be at least four major aspects to focus on.

First, is the completion of the projects that have taken off. Unfortunately, at least one of them seems to be delayed already. Union minister Ashwini Vaishnaw had stated that “Micron will roll out its first chip in the country by December 2024”. It is both an exaggeration and a factual incorrectness to call the chips that will be fabricated outside India and packaged in India as the first ‘made in India’ chips. More than that, it is worrisome that the delay appears to be more than a year. The least that the ISM must do is to set and convey realistic expectations — the same applies to its role in facilitating manpower for these projects as well.

That leads to the second aspect which is the communication to the public, applicants, and investors. These are one of the biggest quantum of taxpayer money being given as incentives to private firms, and much more is desirable in the form of conveying clear goals, targets, and progress.

Further, while Krishnan has said, “Applications under ISM-1 are closed”, he does not say anything about the many that are on hold with neither an approval nor rejection — some of them so for many years now, thereby putting investors in a fix. The other side of the coin is that there is no clarity on whether the ISM will come up with any guidelines for states and investors to not fall for what could be fraudulent or exaggerated applications or proposals in the name of starting semiconductor ‘units’.

We then come to the third aspect, the new or updated policy that is expected to be released as part of phase-2, as well as its executional details. There has been speculation on what could be new or different in the policy related to phase-2; for example, whether the OSAT will continue to get up to 50 per cent incentives or whether such a higher percentage will apply only for advanced packaging unit proposals. Another matter of speculation has been whether industries making elements of the supply chain, like gases or equipment, will get incentives, and if so, whether in the pari passu mode or the production-based mode. Whether Design Linked Incentives (DLI) is in the right direction so far, or it will be tweaked is another question.

Finally, the mission must be forward-looking. For example, there should be clarity on whether India aims to eventually fabricate advanced node cutting-edge chips, make complex tools like the ones used for advanced lithography, and there must be clarity on an approximate timeframe for realising these targets. 

In the same vein, co-ordinating and developing synergies with other missions, like the National Quantum Mission and the IndiaAI Mission, will be important. Deals have been signed on semiconductor co-operation with Singapore and the US, however, quantified goals and actions are yet to be seen in most cases.

Whether the ISM has personnel and leaders with the depth and vision to ‘spell out what it can achieve’ and to ‘achieve what it spells out’ holds the key to the quantity and quality of medium- and long-term success of India’s semiconductor ambitions.

Arun Mampazhy is a semiconductor engineer.