In a significant leap towards self-reliance in the semiconductor industry, India launched three semiconductor projects worth Rs 1.25 lakh crore on March 13, 2024. Of the three semiconductor fabrication facilities, two will be set up at Dholera and Sanand in Gujarat and one in Morigaon, Assam. The semiconductor fabrication unit to be established at Dholera Special Investment Region (DSIR) will be the country’s first commercial fabrication plant.
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In an endeavor to take India towards self-reliance and modernity, PM Narendra Modi recently laid the foundation stone of three chip fabrication units. The three semiconductor facilities are collectively valued at Rs 1.25 lakh crore. These three semiconductor fabrication facilities are:
- Semiconductor fabrication facility at the Dholera Special Investment Region (DSIR), Gujarat;
- Outsourced Semiconductor Assembly and Test (OSAT) facility at Morigaon, Assam; and
- The Outsourced Semiconductor Assembly and Test (OSAT) facility at Sanand, Gujarat.
According to the government, these new facilities would significantly boost the nation’s semiconductor ecosystem, in addition to creating thousands of jobs in the sector and promoting employment generation in related industries including electronics and telecom.
All the three units were inaugurated virtually by the Prime Minister. Earlier, the three projects had received Cabinet approval on February 29 this year. Following is a brief about the three projects:
Dholera (Gujarat), will be home to the nation’s first commercial semiconductor fabrication facility. The city- Dholera, has been christened as the Semicon city of India. The Semiconductor fabrication facility at Dholera Special Investment Region (DSIR) will be set up with a total investment of over Rs. 91,000 crore (US$ 10.9 billion), under the Modified Scheme for setting up of Semiconductor Fabs in India.
It will be established by Tata Electronics Private Limited (TEPL), a wholly-owned subsidiary of Tata Sons Pvt Ltd in JV with Taiwan’s Powerchip Semiconductor Manufacturing Corp (PSMC). This venture is estimated to generate around 20,000 skilled jobs, directly and indirectly.
The capacity of the Dholera unit will be about 50,000 wafer starts per month (WSPM). This semiconductor fabrication facility will produce chips that address the growing demands in various industries like high-power computing, electric vehicles, data storage, artificial intelligence, automotive, wireless communication, defence, and consumer electronics. The chips would be used in an array of applications, including power management IC, display drivers, microcontrollers, and high-performance computing logic.
The Outsourced Semiconductor Assembly and Test (OSAT) facility in Morigaon, Assam will be set up with total investment of about Rs 27,000 crore, by TEPL under the Modified Scheme for Semiconductor Assembly, Testing, Marking and Packaging (ATMP).
According to N. Chandrasekaran, Chairman of Tata Sons (the group’s holding company), the TEPL plant in Assam will first produce semiconductor chips starting at 28 nanometres, with plans for future advancements to 22 nm.
The Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand (Gujarat) will be set up with a total investment of about Rs 7,500 crore, under the Modified Scheme for Semiconductor Assembly, Testing, Marking and Packaging (ATMP). The unit will be established by CG Power and Industrial Solutions Limited in partnership with Japan’s Renesas Electronics Corp.
Tata Group has acquired around 160 acres of land in Dholera to set up the plant, and aims to begin commercial production from 2026. With up to 70% of the project’s expenses expected to be covered by Government subsidies from both central and state authorities, the Dholera facility will eventually become India’s leading commercial semiconductor fab.
IT Minister Ashwini Vaishnaw said that chips will be used in a number of downstream industries, and would meet both domestic and export demands. In addition, India is separately examining a US$ 11.5 billion semiconductor fab project by Israel’s Tower Semiconductor.
The larger global game
Semiconductors, also known as semis, integrated circuits (ICs) or microchips, are becoming more and more significant all over the world. These are tiny electronic devices that empower gadgets ranging from a light switch to a computer and from a fighter jet to a smartphone. They also power our consumer electronics, automobiles, data centers, and critical infrastructure. Furthermore, they are the essential building blocks for many emerging technologies including artificial intelligence, biotechnology, and clean energy- that will have a profound impact on our future.
The growing demand for products including automotive products, consumer electronics, industrial tools & equipment, networking and communication products- is essentially driving the global semiconductors market.
According to the market research on Semiconductor and Electronic, conducted by Precedence Research, the global semiconductor market size reached US$ 544.8 billion in 2023. The market is projected to reach US$ 1,137.57 billion by 2033, expanding at a CAGR of 7.64% during the period 2024-2033.
The Asia Pacific region, as per the report, has contributed about 52.8% market share in 2023. Semiconductor market in the Asia Pacific region is expected to reach US$ 611.73 billion by 2033, up from an estimated US$ 287.79 billion in 2023, growing at a compound annual growth rate (CAGR) of 7.83% during the period 2024-2033.
Even though the semiconductor industry is growing and expanding rapidly, only a small number of countries dominate the sector. The Top 5 countries producing Semiconductors include Taiwan, South Korea, Japan, United States, and China.
India’s play for self reliance
The Covid-19 pandemic had severely disrupted the semiconductor supplies, thereby greatly impacting the global and Indian economy. Even as the global pandemic lockdowns caused shortages of semiconductor chips, it also made India’s reliance on international supply chains more apparent.
The Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India was notified in December 2021 with a total outlay of Rs. 76,000 crore (over US$ 10 billion). This is a comprehensive program for the development of sustainable semiconductor and display ecosystem in the country.
While geopolitical issues continue to impact the global narrative, the Indian government has recognized the economic potential and geostrategic importance of technology in the coming years. With lessons learned from the upheaval in the global semiconductor value chain during the COVID-19 pandemic, the government has set out to develop a robust semiconductor ecosystem in the country.
Conclusion
The launch of the three semiconductor facilities in the country marks a significant stride by India towards boosting domestic semiconductor manufacturing capabilities. This remarkable step by the government is in furtherance of the vision of Aatmanirbhar Bharat and positioning India as the global hub for semiconductors. Simultaneously it will enable Indian semiconductor industry to compete with its global counterparts. And considering the rising frequency of cyberwarfare incidents, it is a vital step towards bolstering national security as well.
