Express news service
NEW DELHI: When the Covid-induced lockdown forced every industry to shut down temporarily, it disrupted the semiconductor industry’s supply chain.
Considered the most vital part of any electronic item, the semiconductor shortage has created huge problems for the electronics manufacturing industries. It damaged 169 industries, including automobiles, computers, cell phones, healthcare equipment and more.
Not only in India, the semiconductor shortage has been felt all over the world. Perhaps this is the reason why the country quickly decided to become self-sufficient in the manufacturing of semiconductor chips and allocated Rs 76,000 crore of production linked incentives (PLI). The goal is to implement more than 20 semiconductor design, component manufacturing and display. manufacturing units in India over the next six years.
“The PLI will invite a direct investment of Rs 1.7 lakh crore over the next six years,” said Minister of Electronics and Information Technology Ashwani Vaishanv, while unveiling the program.
âUnder this program, around 15 to 20 MSME units will be created. “
The government has also notified its policy of covering up to 50% of the cost of setting up two semiconductor manufacturing units and two displays, R&D centers, skills development centers and others.
However, the government’s decision failed to impress industry experts. They all praised the movement but also wonder about its implementation. Overall, it appears that India still has a long way to go before it becomes self-sufficient in the semiconductor industry.
Importance of the chip
Semiconductors are used to power a wide range of electronic devices, from smartphones and cloud servers to modern cars, industrial automation, critical infrastructure and defense systems. Its manufacture requires a lot of components and technicalities. “Semiconductor manufacturing is a complex, capital and technology intensive process for manufacturing semiconductor wafers,” a government notice said.
Only a few countries control its production and the others depend on its import. The Taiwanese company TSMC (Taiwan Semiconductor Manufacturing Company) and the South Korean company Samsung manufacture up to 70% of the semiconductors in the world.
A developing country like India cannot depend on one country for this vital commodity. The European Commission has unveiled a public-private semiconductor alliance to increase its share of global chip production to 20% by 2030. South Korea has also offered incentives to attract $ 450 billion in investment by 2030.
India has emerged as a center for semiconductor research and design, but has yet to produce the chips locally. For India, Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC) could soon launch their project. Vedanta, led by Anil Aggarwal, is ready to invest up to Rs 60,000 crore to set up a sophisticated chip and glass manufacturing ecosystem. The Tata group is in talks with three states to invest up to $ 300 million in the establishment of a semiconductor assembly.
What do the numbers say
India imports 100% of the chips from Taiwan, Singapore, Hong Kong, Thailand and Vietnam, as do other countries in the world. After the pandemic, demand grew rapidly with an emphasis on digitization. According to the Deloitte study, PC sales grew more than 50% year over year in early 2021, while cloud computing data center chip purchases increased 30%.
The Indian government said in its notification that the global semiconductor market is Rs 33 lakh crore in 2020 and is expected to reach Rs 75 lakh crore) by 2030. The Indian semiconductor market stands at Rs 1 , 13 lakh crore in 2020 and is expected to reach Rs 4.73. lakh crore by 2026. By 2030, India’s semiconductor market will be driven by wireless communications, consumer electronics and automotive electronics with respectively 24%, 23% and 20% share of Marlet.
While experts praised the government’s PLI program for Rs 76,000 crore, they also questioned its implementation. Anil Kadam, Vice President of the Smart Grids Division of IEEMA (Indian Association of Electrical and Electronics Manufacturers), said: âI know it is a very small amount for such a large project. However, if he succeeds in attracting even one foreign manufacturer or establishing a factory, that would be a great achievement. “
Echoing the same point of view, Indian Electronics and Semiconductor Association (IESA) Vice President Sandeep Aurora said: âThis is a very good start and the amount is sufficient for this. the moment. Obviously as we move forward we can add more budget to it. “
India has been trying to attract foreign companies to set up semiconductor manufacturing units since 2006. It lifted tariffs in 2017 and requested an expression of interest in 2020. However, these efforts have failed. not received many responses. Experts urge the government to create a conducive business environment in order to attract foreign investment.