US starves China of electronic chips, scuttles its tech ambitions

Can India play catch up?

Without the semiconductor chips, no electronic good or Artificial Intelligence will work. Only a few thousand scientists in the world have the expertise needed and it is a long haul for India.

India is offering more than $1 billion in cash to each semiconductor company that sets up manufacturing units in the country as it seeks to build on its smartphone assembly industry and strengthen its electronics supply chain.

Keen to incentivize and attract investments for setting up of semiconductor FABs in India, the government has issued Expression of Interest (EoI) for setting up/expansion of existing semiconductor wafer/ device fabrication (FAB) facilities in the country or even acquisition of semiconductor FABs outside India.

Setting up semiconductor FAB facilities and its ecosystem was one of the main strategies of the National Policy on Electronics 2019 (NPE 2019) that aims to position India as a global hub for Electronics System Design and Manufacturing (ESDM). India is expected to import semiconductor chips worth IN ₹187,200 crores (approximately US $26.38 billion) from a IN ₹3,621,600 crore (approximately US $510.25 billion) market worldwide in 2020.

The Government of India invited expressions of interest (EoI) towards the end of 2020, and actively following up with manufacturers like Taiwan Semiconductor Manufacturing Company, VIA Technologies Inc., United Microelectronics Corporation, Intel, Micron Technology, Inc., NXP Semiconductors, and Texas Instruments, Fuji Electric Co. Panasonic, and Infineon.

India has two fabs — Society for Integrated Circuit Technology and Applied Research (SITAR), a unit of the Defence Research and Development Organisation (DRDO) in Bengaluru and a semiconductor laboratory in Chandigarh, which build silicon chips for strategic purposes like defence and space and not for commercial use. Semiconductor fabs need investment starting around $8 billion, and the numbers climb rapidly upwards. They have very heavy running costs, and technology needs to be upgraded typically every 3-4 years.