SEMI
CONDUCTORS – SCI & TECH
News:
Semiconductor Fab: The
Unfinished Agenda
What's
in the news?
●
Semiconductor fabrication represents the
ultimate frontier of human tech advancement.
Semiconductor
industry:
●
Semiconductors are the thumbnail-sized
building blocks of almost every modern electronic device from smartphones to
connected devices in the Internet of Things (IoT).
●
They help give computational power to
devices. The global semiconductor
industry is currently valued at $500-$600 billion and caters to the global
electronics industry currently valued at about $3 trillion.
●
According to the Electronics and IT
Ministry, semiconductor demand in India would increase to $70-$80 billion by 2026 with the growing demand for
digital devices and electronic products.
Applications
of Semiconductors:
1.
Electronic devices:
●
Semiconductors are the basis transistors,
diodes, integrated circuits, microprocessors, and memory chips, which are used
in electronic devices such as computers, smart phones, televisions, radios, and
more.
2.
Solar cells:
●
They are used in the manufacture of solar
cells, which convert sunlight into electricity.
3.
Lighting:
●
They are used in light-emitting diodes
(LEDs) to produce energy-efficient lighting.
4.
Sensors:
●
They are used in power-electronics, which
are used to control and convert electrical power.
Importance
of Semiconductor:
●
Semiconductor chips play a critical part
in making life easier, stimulating digital disruption, and advancing the
economy.
●
Semiconductors are the foundation of modern electronics
driving the next phase of digital transformation under Industry 4.0.
●
The ubiquitous chips are now an integral
part of contemporary automobiles, household gadgets such as refrigerators, and
essential medical devices such as ECG machines.
●
Scarcity of chips can cause production to
suffer in almost every industry, underlining the necessity to diversify chip
supply.
India's
Semiconductor reliance on other countries:
●
India is ready in just one of the three
parameters of chip self-reliance. According to government data, India imports 94 percent of its electronics
and 100 percent of its semiconductors.
●
India
currently imports all chips and the market is estimated to touch $100 billion
by 2025 from $24 billion now.
New
Semiconductor policy:
●
Government
will provide up to 50% of Project cost for two semiconductors and two display
fabs.
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Support shall be provided for a period of six years. The tenure of the actual
fiscal support outflow may be extended based on the approval of the Minister of
Electronics and Information Technology.
●
Further, for additional support, the
government will offer infrastructure support through “Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme for
development of infrastructure / Common Facility Centre subject to the proposal
satisfying the EMC 2.0 framework requirements.
●
The semiconductor fabs set up in India
will be supported through purchase preference in procurement of electronic
products by the Government under the Public Procurement (Preference to Make in
India) Order 2017.
●
Additionally, up to 5% of the outlay of
the scheme shall be earmarked for meeting the research and development
(R&D), skill development and training requirements for the development of
semiconductor ecosystem in India.
●
Companies / Consortia / Joint Ventures
proposing to set up a Silicon CMOS based Semiconductor Fab in India for
manufacturing Logic / Memory / Digital ICs / Analog ICs / Mixed Signal ICs /
SoCs will be eligible.
Why
is promotion for the Semiconductor industry necessary?
1.
Import dependency:
●
Presently, India imports 100 percent of
its semiconductors (approx. $15 billion in 2020) of which 37% comes from China.
2.
Safeguarding against future chip crunches:
●
Presently, there’s a global shortage of
many categories of chips, which is affecting global automobile production and
the global prices of many electronic items.
●
Setting up domestic manufacturing units would
help to insulate India against future supply disruptions. Moreover, any
intellectual property that is generated will be a big bonus.
3.
Geographic specialisation:
●
Semiconductor supply chains are marked by
geographical specialisation with 75% of
global manufacturing capacity in East Asia.
●
Geographic specialisation creates
vulnerabilities emerging due to natural disasters, infrastructure shutdowns or
geopolitical events.
●
Therefore, it is critical to develop
secure and resilient semiconductor supply chains for industrial growth, digital
sovereignty, and technological leadership.
4.
Need of the Global electronics market:
●
Currently valued at around USD 2 trillion
(₹150 lakh crore), the global electronics market is expected to grow
significantly given the increasing
penetration of emerging technologies including 5G, IoT, Artificial
Intelligence, Robotics, Smart Mobility, Smart Manufacturing, etc.
5.
India’s Low Market penetration:
●
While the global semiconductor market was
valued at ₹33 lakh crore in 2020 and expected to reach ₹75 lakh crore by 2030,
the Indian semiconductor market stood at ₹13 lakh crore in 2020 and is
estimated to reach ₹4.73 lakh crore by 2026.
6.
Need for EVs:
●
With India pushing for Electric Vehicles,
there is higher dependence on semiconductor chips.
●
For example, in EVs nearly 80 percent of
functionality comes from software, including battery optimisation, heat
management, performance etc.
Challenges
in Semiconductor industry:
1.
Capital intensive:
●
Chip design and manufacturing is a highly
capital-intensive business.
●
It calls for a developed ecosystem for the
business to thrive. As per a government estimate, it would cost roughly $5-$7
billion to set up a chip fabrication unit in India.
2.
Minimal Fiscal Support from the Government:
●
To increase investments, the Indian
government should prioritise increasing fiscal support in this sector.
●
There is minimal support at this time,
making it hard to set up manufacturing capacities in the semiconductor
industry.
3.
Low Availability of Fabrication Capacities:
●
India has been dealing with a lack of
fabrication (fab) capacities recently. Even though the country has adequate
chip design talent, there is no proper chip fab capacity.
●
Hence, it is imperative to overcome the
low availability of fab capacity to remain ahead in the global semiconductor
industry.
4.
Resource Inefficient Sector:
●
Chip fabs are also very thirsty units
requiring millions of litres of clean water, an extremely stable power supply,
a lot of land and a highly skilled workforce.
Schemes
related to Semiconductor industry:
1.
Production linked Incentive scheme for semiconductor:
●
In December 2021, India announced its
roughly $10 billion dollar production-linked incentive (PLI) scheme to
encourage semiconductor and display manufacturing in the country.
●
Incentive support to the tune of Rs.55,392
crore (7.5 billion USD) have been approved under PLI for Largest Scale
Electronics Manufacturing, PLI for IT Hardware, SPECS Scheme and Modified
Electronics Manufacturing Clusters (EMC 2.0) Scheme.
●
In addition, PLI incentives to the quantum
of Rs.98,000 crore (USD 13 billion) are approved for allied sectors comprising
ACC battery, auto components, telecom & networking products, solar PV
modules and white goods.
2.
Semiconductor Fabs and Display Fabs:
●
It would provide fiscal support of up to
50% of the project cost for setting up semiconductor and display fabrication
units.
●
The Union government will work with the
States to set up high-tech clusters with the required infrastructure such as
land and semiconductor-grade water.
3.
Semi-conductor Laboratory (SCL):
●
MeitY will take requisite steps for
modernization and commercialization of Semi-conductor Laboratory (SCL).
●
MeitY will explore the possibility for the
Joint Venture of SCL with a commercial fab partner to modernise the brownfield
fab facility.
4.
Compound Semiconductors:
●
It will support fiscal support of 30% of
capital expenditure to approved units.
●
At Least 15 such units of Compound
Semiconductors and Semiconductor Packaging are expected to be established with
Government support under this scheme.
5.
Semiconductor Design Companies:
●
The Design Linked Incentive (DLI) Scheme
shall extend product design linked incentive of up to 50% of eligible
expenditure and product deployment linked incentive of 6% – 4% on net sales for
five years.
●
Support will be provided to 100 domestic
companies of semiconductor design for Integrated Circuits (ICs), Chipsets,
System on Chips (SoCs), Systems & IP Cores and semiconductor linked design.
1.
Recent changes made in PLI scheme:
Fiscal support:
●
The government approved uniform fiscal
support of 50% of project cost for semiconductor fabs across technology nodes
and display manufacturing.
●
It also raised fiscal support for compound
semiconductors, packaging and other semiconductor facilities to 50% from 30%.
Target technologies:
●
It will include discrete semiconductor
fabs.
●
Discrete semiconductors are used for
devices performing basic electronic functions.
2.
Design linked incentive scheme:
●
It also announced fiscal support for a
design-linked initiative (DLI) scheme to drive global and domestic investment
related to design software, IP rights etc.
Three components of the scheme:
1. Chip Design infrastructure
support: C-DAC will set up the India Chip Centre to host the
state-of-the-art design infrastructure (viz. EDA Tools, IP Cores, and support
for MPW (Multi Project Wafer fabrication) & post-silicon validation) and
facilitate its access to supported companies.
2. Product Design Linked Incentive:
Reimbursement of up to 50% of the eligible expenditure subject to a ceiling of
Rs. 15 Crore per application will be provided as financial support to the
approved applicants who are engaged in semiconductor design.
3. Deployment Linked Incentive: An
incentive of 6% to 4% of net sales turnover over 5 years subject to a ceiling
of Rs. 30 Crore per application will be provided to approved applicants whose
semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips
(SoCs), Systems & IP Cores and semiconductor linked design are deployed in
electronic products.