DH Deciphers | Decoding India’s quest for semiconductor manufacturing

A 100% central government-owned enterprise Semiconductor Complex Limited (SCL) was set up in early 1980s, with the manufacturing facility in Mohali in Punjab.

During Prime Minister Narendra Modi’s recent state visit to the US, Micron Technology announced to set up a semiconductor manufacturing facility in India. The company plans to set up a plant in Gujarat and start producing semiconductor chips by the end of 2024. According to IT minister Ashwini Vaishnaw, India has been attempting to develop semiconductor technology over the last four decades. But still the country is 100 per cent dependent on imports to meet its chip requirements. In this issue of DH Deciphers, Gyanendra Keshri decodes India’s quest for semiconductor manufacturing.

What is the importance of semiconductors?

Semiconductor is a tiny piece of hardware. With advancement in technology semiconductor chips are becoming smaller in size but gaining increasing importance in almost all segments of human life. It is called the “brain” of modern electronics. Be it the consumer items like smartphones, laptops, TVs or industrial applications, defence equipment and aerospace, semiconductor chips play a critical part.

Also Read: India still fumbling in its semiconductor mission

Which countries are the major producers of semiconductor chips?

Only a handful of countries in the world produce semiconductor chips. Taiwan, China, South Korea, Japan, and the United States are among the top producers of semiconductors in the world. Semiconductor production system is complex and integrated. None of the countries are self-reliant in semiconductors and none specialise in every chip category. All the major semiconductor manufacturing nations mentioned above are among the biggest exporters and importers of chips as well

What attempts have been made in India for semiconductor manufacturing?
India’s quest for semiconductor manufacturing dates back to 1976 when the union cabinet chaired by then Prime Minister Indira Gandhi approved a proposal to set up a semiconductor complex. A 100 per cent central government-owned enterprise Semiconductor Complex Limited (SCL) was set up in early 1980s, with the manufacturing facility in Mohali in Punjab. SCL entered into a technical collaboration with the American Microsystems Inc and commenced production of 5 micron complementary metal-oxide semiconductor (CMOS) technology in 1984. India’s dream of becoming a semiconductor manufacturing hub was shattered by a mysterious fire that broke out at the Mohali facility in February 1989. In 2006, SCL was restructured as a research & development centre within the Department of Space. It was renamed ‘Semiconductor Lab’.

Initiatives taken by Modi Government to support semiconductor manufacturing?

Also Read: Semiconductors | Promises aside, MeitY must deliver tangible results

In December 2021, the union cabinet chaired by Prime Minister Narendra Modi approved Rs 76,000 crore production-linked incentive (PLI) scheme for semiconductor manufacturing in the country. Under the initiative called ‘Scheme for Setting up of Semiconductor Fabs and Display Fabs in India’, the central government has promised to provide fiscal support of upto 50 per cent of project cost. The government has set a target to set up at least 20 semiconductor design, components manufacturing and display fabrication units over the next six years.

What is the progress on semiconductor manufacturing?

Some big announcements have been made. A joint venture between Anil Agarwal-led Vedanta and Taiwanese electronics manufacturer Foxconn in September 2022 announced their plans to set up semiconductor and display manufacturing plants in Gujarat with an investment of Rs 1.54 lakh crore. An international consortium ISMC, which includes Israel-based Tower Semiconductor, and Singapore-based IGSS Ventures, has proposed to invest $3 billion in setting up a chip-making plant in Karnataka. Micron Technology, which is led by Indian-American business executive Sanjay Mehrotra, has announced plans to build a new assembly and test facility in Gujarat with an investment of $825 million.