New Delhi: India is aggressively working towards becoming the global technology and electronics manufacturing hub. Semiconductors are one of the largest places the nation is looking to lessen its reliance on another country. Smartphones, cars, computers, defence, medical devices and nearly every modern electronic device will use chips.
The Indian government has put in place multiple programmes and incentives for developing a robust semiconductor industry. Yet, despite these initiatives, India is still grappling with a number of challenges in building up a full-fledged semiconductor manufacturing supply chain.
India has strong chip design talent, but manufacturing is different
India is already a big market for semiconductor design and research. The country offers a number of large engineering and design teams for the myriad of global tech companies.
However, designing a chip and manufacturing one are two very different things. High-precision manufacturing factories, high-priced equipment, special staff, and an extremely clean production line are the needs of semiconductor manufacturing.
A state-of-the-art semiconductor manufacturing facility (fab) may cost billions of dollars to manufacture. It also involves sophisticated technologies, presently monopolized by few companies and a few countries.
Government pushes Semiconductor manufacturing
The government introduced the Semicon India Programme and India Semicon Mission to decrease the importation of chips in India.
The government has also launched funding for semiconductor fabrication, packaging and testing and other components of the semiconductors value chain.
In recent times, India Semiconductor Mission 2.0 has been announced aiming to further bolster the Indian semiconductor ecosystem. There are also several semiconductor and electronics projects which have been approved by the government.
This indicates that India wishes to go beyond mere assembly of electronic goods and develop more technology domestically.
Why is it still so difficult?
An important obstacle is the absence of a domestic value chain.
Chips factories are not self-sufficient! Requires special equipment, chemicals, gases, packaging capacity, testing facilities, a good supply of power and water. A good number of these products and technologies are still foreign.
Skilled manpower is another challenge. There are millions of engineers in India, but those who are specialised to work in advanced semiconductor manufacturing have a very technical and special field of knowledge in chip fabrication, equipment maintenance, materials science and other areas.
The huge investment required is another barrier. The construction and operation of the factories are very costly and the technology is evolving rapidly. However, companies have to be sure they will be able to function for many years.
India is also trying to build electronics components
Another weak point in India’s electronics industry is related to the semiconductor challenge.
India is now a huge hub for the manufacturing of smartphones but a large number of key components are being imported in. Often, displays, parts of cameras, sensors, chips or other parts are supplied from abroad.
India’s government is now promoting local manufacture of electronics components as well. Its goal is to establish greater local suppliers and decrease India’s reliance on imports.
The road ahead
India’s semiconductor journey has just begun. The government has initiated some crucial measures, but it would not be a prompt development of a competitive chip industry.
There’s a need for ongoing investment, talented manpower, robust research efforts, and partnerships with global tech giants in India. In addition, it must establish a full value chain up to final assembly, not just on chip assembly or a handful of large plants.
It has already demonstrated its ability to create huge digital platforms and make itself a big electronics manufacturing hub. The next hurdle is more difficult to develop the breakthrough technology and components for the products right here in India.
If India succeeds in addressing these issues, semiconductors can be one of the key components of India’s technology and manufacturing vision in the next few years.
