PPP in Semiconductor manufacturing

14 Oct 2023 7 mins Download PDF

Why in the News?

Six working groups’ report on framing the Indian government’s artificial intelligence (AI) roadmap has recommendations for public-private partnerships to make semiconductors for AI applications.

PPP in Semiconductor manufacturing:

• The PPP model would be leveraged to build so-called “GPU clusters”.

• Such GPU clusters shall act as masses of resource-intensive graphics processors used by AI applications, which will be made available to Indian start-ups and researchers.

• The report recommends:

• Fiscal interventions to facilitate local manufacturing of robotics hardware

• Building of ‘demonstration facilities’ to test and show off technologies.

• Building capacity in the robotics sector

About:

Potential of the 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:

Efforts taken to enable the growth of the industry:

• India’s Semiconductor Mission:

  •   Under the Ministry of Electronics and Information Technology.

  • To make India a global hub for electronics, chip manufacturing, and design.

  • Launched as part of the  ‘Make in India’ Initiative.

• 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.

• Four Schemes under the Mission

  • Semiconductor Fab Scheme – A fiscal support of up to % of project cost on projects appraised by the Expenditure Finance Committee.

  • Display Fab Scheme - A fiscal support of up to % of project cost on projects appraised by the Expenditure Finance Committee.

  • 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.

  • 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.

Challenges faced by the sector:

• Shortage of water and energy requirements.

• With ever increasing population and increased strain on water resources, access to water by semi-conductor industries will be a challenging one.

• Power outages and coal shortages remains a concern until they are offset by adoption of renewable energy to expand the power grid as the sector requires electric supply available 24X7, uninterrupted, 365 days a year, except for the scheduled maintenance.

• Need for Critical materials as raw materials for the semiconductor industry, as India either needs to import them or invest in domestic mining.

• India meets its current raw material requirements through imports from China, constituting 40%. 

• Domestic mining shall take considerable time and financial investments.

• Requirement of vast stretches of land protected from natural disasters such as Earthquakes.

• Shortage of Skilled workforce apart from design engineers who are trained in Device physics and process technology required for fabricating and manufacturing chips.

• Building a robust ecosystem because fabs require a variety of high-purity gases and wafers to fabricate the chips.

• Other Potential competitors for India:

  • China - It has considerable resources and political will

  • Taiwan – It holds a virtual monopoly in the global chip manufacturing industry, responsible for 60% of the global production.

  • Vietnam, the USA, and South Korea are also potential competitors.

Concerted efforts with the right policy implementation and resource facilitation shall enable India to emerge as a global hub for semiconductor manufacturing industry.