Why India’s Semiconductor Vision Matters: A Closer Look

This blog is about India's Semiconductor Vision better known as Chips. A semiconductor is a material with electrical resistance between that of metals and insulators, allowing it to conduct electricity partially. Examples include pure elements like silicon and germanium, and compounds like gallium arsenide and cadmium selenide. Chips run our lives. They power all gadgets and as the world becomes more digital chips have become central to our existence which means they are also central to our economy. Chips have become a strategic resource, so countries want to secure supplies and boost production. Governments are investing billions, and trying to win the global chip race. Of course, India doesn’t want to be left behind. Now the question is, what Delhi is doing to get more chips? Delhi has announced that India has approved three projects totaling cost around $15 billion. The idea is to boost chip production. The first project is a semiconductor fabrication plant. It will be India’s first set up by Tata Group and Taiwan power chip based in the western state of Gujarat in the Dholera region. The estimated cost for this project is around 91,000 crore rupees, that is $10 billion. Once it is ready, it is expected to produce 3 billion Chips every year. These will not be AI Chips. They will be more basic, but they should be able to power many things like high-power computers, electric vehicles, and electronics. The project has already started.

India's semiconductor vision

Chip assembly plant:

India is making a chip assembly plant, which will cost $3.2 billion. It will be set up by Tata Group, but this will be in the state of Assam. It will be India’s third semiconductor unit. Once it is ready, it will be able to produce up to 48,000,000 Chips every day. This plant will mainly cater to export needs.

Chip packaging facility:

It will be set up by CG Power in partnership with Japan’s Renesas Electronics and Thailand's Star Microelectronics. The plant will be located in Gujarat‘s Sanand. This plant will make specialized chips to be used for sectors like defense and space. The government is investing around $916 million in this project.

By connecting the dots, we can see the clear picture that India wants to boost its semiconductor market. It wants to become a big global player like Taiwan and the US and this is not the first investment done by India. Last year, New Delhi announced a $2.75 billion micro facility.

Establishing a semiconductor fabrication plant in India offers a multitude of benefits for the country:

1. Reduced Dependence on Imports: India currently relies economically on $24 billion in semiconductor imports to fuel its electronics industry annually. By establishing a semiconductor fabrication plant domestically, India can significantly reduce this dependence on imports, which will enhance its economic sovereignty and stability.

2. Enhanced Domestic Production Capabilities: A semiconductor will also develop India’s domestic production capabilities. This will create approximately 70,000 new job opportunities by 2026, develop a skilled workforce, and foster a more robust manufacturing ecosystem within the country.

3. Stimulated Innovation: The presence of a semiconductor fab can act as a catalyst for innovation across various sectors. Access to locally produced chips can spur the development of new technologies, products, and services, driving innovation-led growth in the economy.

4. Integration into Global Value Chain: By becoming a player in semiconductor manufacturing, India can integrate itself into the global value chain of this critical industry. This integration opens up opportunities for collaboration, investment, and technology transfer with international companies, bolstering India's position in the global tech landscape.

5. Economic Growth: The establishment of a semiconductor fab will contribute to India's economic growth by boosting manufacturing competitiveness, reducing import dependency, and narrowing the trade deficit. It will also attract investment, foster partnerships, and stimulate ancillary industries, further driving economic development.

6. Technological Advancement: Investing in semiconductor manufacturing aligns with India's goals of technological advancement and digital transformation. It provides the foundation for developing advanced technologies such as AI, IoT, and 5G, which are crucial for India's future growth and competitiveness.

Overall, a semiconductor fabrication plant in India represents a strategic investment that not only strengthens the country's economic foundations but also propels it towards becoming a global technology powerhouse.