Context: The semiconductor plant being constructed by Tata Electronics in Assam would begin production of “Made In India” semiconductor chips in 2026.
Relevance of the topic:
Prelims: Question on uses and applications of semiconductors.
Mains: Analytical questions on challenges and potential of the Indian semiconductor sector.
Major Highlights
- The semiconductor plant being constructed by Tata Electronics in Assam will be completed in 2025, and will begin production of the chips in 2026.
- It will be India’s largest semiconductor plant (spread across 220 acres).
- The plant is expected to produce up to 48 million semiconductor chips per day, employing advanced packaging technologies like flip chip and Integrated System in Package (ISIP).
- The chips will be used in automobile and telecom industries. They will be supplied to various countries including Japan, the United States, and Germany.
- Note: Additionally, Tata Electronics is setting up two semiconductor fabrication units in Gujarat, with the first expected to be operational by 2026.
Significance:
- Significant step towards reducing India’s dependence on imported semiconductors.
- Create future-ready industry in the North-Eastern states & is a part of the vision of developing the states as the ‘Ashta Lakshmi’ States.
- Provide direct & indirect employment in the state. An electronic city is being constructed for providing residential facilities to about 40,000 employees.
About Semiconductor Sector in India
- India relies heavily on imports of semiconductor chips.
- India's semiconductor imports reached approximately ₹1.71 lakh crore (about USD 20.7 billion) in the fiscal year 2023-24.
- India imports the majority of semiconductors from Taiwan and China.
- The Indian government has launched various initiatives to give a boost to semiconductor manufacturing in India.
- Production Linked Incentive (PLI) to attract the foreign semiconductor manufacturers like Taiwan Semiconductor Manufacturing company (TSMC) and Foxconn.
- Silicon corridor: India has developed the silicon corridor for preferred destinations of semiconductor manufacturing i.e., Gujarat, Karnataka and Tamil Nadu.
- Semicon India program to develop the semiconductor sector especially in the display domain.
Challenges to Semiconductor Sector in India:
- High capital requirement- A semiconductor plant requires capital of more than $10 billion and has a long gestation period.
- Technological lags: India lags behind the sophisticated technologies to fabricate the semiconductor nodes like 3nm and 5nm.
- Supply chain deficiency: India lacks the silicon deposits and depends on imports for silicon, leading to a constraint in raw material availability.
- Competition from global players: India faces a cut-throat competition from the established players like Taiwan, South Korea and USA.
- Limited Fabrication expertise: India lacks the skilled labour force and experts who have good experience in the semiconductor fabrication methods.
Opportunities for the Indian Semiconductor Sector
- Geo-political shifts: Tensions between China on Taiwan opens up an opportunity for India to boost its semiconductor sector by inviting companies like Foxconn under ‘China plus one strategy’.
- Rising global demand: With the 5G and Internet of Things (IoT), the demand for semiconductors is rising in the world.
- Government initiatives: Schemes like PLI and subsidised facilities to semiconductor companies create an opportunity for a boost in the sector. E.g., Vedanta-Foxconn facility.
Suggestive Measures
- Compatible infrastructure: India should focus on creation of a compatible infrastructure for the semiconductor sector. Example- Separate Silicon manufacturing hub like Taiwan.
- Upskilling labour: Launching dedicated courses and training programmes in colleges to master the fabrication of semiconductors
- Global partnerships: India should focus on bringing nations like the USA and EU to promote chip manufacturing in India under the ‘China Plus One’ program.
About Semiconductor Chips
- Semiconductor Chips are essential components used in almost all modern electronic devices, enabling them to process data, control functions, and power operations.
- Made primarily from materials like Silicon, these chips are integral to technologies such as smartphones, computers, cars, medical devices, and industrial machinery.
- Following are the steps of manufacturing of semiconductors:
- Designing of the semiconductor chips based on the requirements.
- Fabrication i.e., a complex process of creating circuits and nodes on the silicon wafer.
- Testing and Packaging: Ensuring quality and packaging to supply chips to industries like automobile and telecommunications.
Conclusion: To boost India's semiconductor sector, it is crucial to enhance infrastructure, invest in R&D, and build skilled workforce capabilities. Strengthening supply chains, fostering global partnerships, and leveraging government schemes like PLI will create a robust ecosystem. Strategic investments in advanced manufacturing technologies and sustainable practices will drive long-term growth.