upsc important editorial details

Learning from the CHIPS Act of the US

stylish_lining
09 Aug,2023 GS-Paper Indian Eco.
  • Download Pdf
    •
  • Print
    •  5 Min Read

    Learning from the CHIPS Act of the US

    Why in the news?

    The United States’s Creating Helpful Incentives to Produce Semiconductors and Science (CHIPS) Act, 2022 which aims to strengthen its semiconductor industry, has completed one year as a law.

    What are the Provisions of the law and what lessons can India learn from it?

     

     

    Provisions of the CHIPS Act

    India’s framework

    Lessons that can be learned

    1.

    Four separate funds have been created for the implementation of the act:

        1. Department of commerce is the lead agency administering $50 billion CHIPS fund for accelerating semiconductor research and manufacturing.
        2. Department of Defence is allocated with $2 billion for defence-specific technologies.
        3. Department of State allocated $0.5 billion to coordinate with foreign partners on semiconductor supply chain management.
        4. National science Foundation allocated $0.2 billion to foster growth of semiconductor workforce.

     

    India’s semiconductor policy is managed by MeiTY directly or indirectly.

    1 . An independent division called India Semiconductor Mission that operates within a non-profit company set up by MeiTY handles schemes for manufacturing, displays and compound semiconductors.

    2. The ISM committee comprises largely of MeiTY bureaucrats.

    3. C-DAC, an R&D organisation for chip designing operates under MeiTY.

     

    Needs a whole-of-government approach

    2.

    National Semiconductor technology Centre (NSTC) collaborates with industry and educational institutions for workforce development plans.

    MeiTY has rolled out Chips2 Startup (C2S) programme aimed to collaborate with over 100 universities and colleges.

    In India, private training centres are preparing the chip designers outside the conventional university learning programmes. Therefore, C2S has to certify good programmes of universities and private training institutes rather than running them.

    3.

    CHIPS Program Office (CPO) lays down guidelines to assess the financial viability of a project.

    India also has similar provisions to assess the financial viability of a project.

    India lacks in transparency. Therefore, regular monthly progress reports on the semiconductor programme needs to be published to instil expectations and reassurance in India’s plans.

    4.

    Dept. of Commerce invests $11 billion for future research.

     

    For instance, given that downscaling of transistors is impossible, focusing on advancing packaging for a multidimensional arrangement of semiconductors in a single substrate, all in one package is a viable strategy to excel in Semiconductors in the future. Hence, a National Advanced Packaging Manufacturing Program has been rolled out by the government.

    The investments in R&D for future research has been low in India.

    Adopt strategies to invest in research on future technologies.

     

    About:

    India’s Semiconductor Industry:

    Potential of Indian Semiconductor Industry:

    1. The Electronic Manufacturing sector has grown from $30 billion to over $100 billion.
    2. India has more than 200 mobile manufacturing units.
    3. Domestic semiconductor consumption is expected to reach $80 billion by 2026.

    Facilitating factors for the growth of the industry:

     

     

     

    Facilitating factors

    Supportive governmental policies

    High Internet penetration & affordable data connectivity

    Huge market

    Friendly Corporate tax system

     

    Strong semiconductor R&D industry

    Robust Fibre connectivity

    Skilled Workforce

    Political Stability

     

     

     

     

     

     

     

     

     

     

    India’s Semiconductor Mission:

      1. Under the Ministry of Electronics and Information Technology.
      2. To make India as a global hub for electronics, chip manufacturing and design.
      3. Launched as part of ‘Make in India’ Initiative.
      4. The mission proposes a $10 billion incentive plan with a fiscal outlay of up to 50% of a project’s cost to display and semiconductor fabricators.
      5. Four Schemes under the Mission
        1. Semiconductor Fab Scheme – A fiscal support of up to % of project cost on projects appraised by the Expenditure Finance Committee.
        2. Display Fab Scheme - A fiscal support of up to % of project cost on projects appraised by the Expenditure Finance Committee.
        3. Semiconductor and Semiconductor ATMP - fiscal support of 50% of capital expenditure to Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs and Semiconductor Packaging (ATMP / OSAT) units.
        4. Design Linked Incentive Scheme - offer financial incentives and design infrastructure support across various stages of development and deployment of semiconductor design(s) for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design(s) over a period of 5 years.

    Link: Learning from the CHIPS Act of the U.S.   - The Hindu

    1