India needs to get more aggressive in semiconductor ambitions
Premium- The government forecasts that India would need $63 billion worth of semiconductors by 2026, approaching the country’s oil import bill of some $80 billion
India needs to be far more ambitious on creating a domestic semiconductor industry, complete with all backward linkages, and not just offer funds as an incentive for companies to come and set up shop in the country. The response to the government’s $10 billion incentive scheme for setting up semiconductor and display fabs, and other advanced microelectronics, confirms the proposition.
Electronics depend on transistors, which amplify a flow of electrons, convert the flow from alternating current to direct current (this is called rectification, and its reverse is what the inverter does, converting the direct current from a storage battery to the alternating current household electricals are designed for) or switch a flow of electrons. Before the arrival of transistors, these tasks called for large vacuum tubes and bulbs made of glass. Old radios and the original mainframe computers were big and heavy, because they contained large numbers of these diodes, triodes, pentodes, etc. made of glass. Integrated circuits house a large number of transistors on a wafer of semiconductor material, mostly silicon, to perform coordinated functions.
These semiconductor chips are of assorted types, broadly divided into logic chips, memory chips and DAO (discrete, analogue and others). The modern economy needs all kinds of chips in great quantities, for everything from computers, telecommunication gear, robots, medical equipment, watches, industrial machines, just about anything. The government forecasts that India would need $63 billion worth of semiconductors by 2026, approaching the country’s oil import bill of some $80 billion. India imports all its silicon. It is eminently desirable to produce these things here, in the country itself, for a crucial reason besides the balance of payments considerations.
Semiconductor chips go into computers, phones, server farms that store data. They are used to control the launch of missiles and in their guidance systems. Chips are embedded in warplanes, submarines, aircraft carriers. At present, all the silicon needed in these critical pieces of strategic equipment is imported. If we do not have foolproof access to all the silicon that our strategic capability needs, all the time, India can bid goodbye to its goal of strategic autonomy, to be a regional, if not a global power. India has its own nuclear energy programme, a space programme and, drawing on these two, a programme to build nuclear weapons and delivery mechanisms. India does not want to take shelter under another country’s nuclear umbrella when confronting a nuclear-armed hostile power. India would like to be capable of defending itself on its own.
External dependence for vital semiconductors is the chink in India’s armour. In the normal course, there is little risk of India not being able to access cutting-edge semiconductors when it needs them. That is what China thought, too — until President Trump shook it rudely awake from that idyll. The US has imposed a technology sanction on vital Chinese companies, such as Huawei, which is not just a maker of telecom gear but also has a footprint in quantum computing and quantum communications, apart from in other things. The Chinese are now making an intense effort to become self-reliant in silicon.
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As America’s strategic partner to counterbalance China, why should India worry about being at the receiving end of a possible US technology sanction? India is not content to tuck itself under the protective wing of any large power. It buys arms from diverse quarters, including Russia. Right now, the US government is debating a waiver for India for the sanctions its laws mandate against any country that buys sophisticated arms from Russia, on account of India’s purchase of the S400 missile system from Russia. American politics is increasingly a partisan quagmire and the President and his administration might be thwarted in their design to give a country like India a free pass on sanctions, by a hostile Congress that wants to paint the administration as weak.
What can India do to guard against such an eventuality? It has no alternative to building its own capability in semiconductors. However, the existing scheme to foster local manufacture of chips and displays and other advanced microelectronic does not quite cut it.
The government offers subsidies on the following lines. It offers 30%/40%/50% of the capital cost as a subsidy for those who set up fabs to manufacture chips with nodes in the size range 45-65 nanometre (nm)/28-45 nm/smaller than 28 nm. The significance of the size of the circuits is that the smaller these are, the larger the number of transistors you can crowd onto a chip. Apple’s M1 chip, which runs its latest Macbooks, for example, mounts 16 billion transistors on a wafer of silicon. This is possible because the node is 5 nm in size. Apple has designed the chip and outsourced production to Taiwan Semiconductor Manufacturing Corporation (TSMC), arguably the most strategic company in the world right now — it if goes down, assembly lines of phones, personal computers, servers and other sophisticated equipment would come to a grinding halt, missile and guidance systems would shut down, were these to require replacement chips.
When you want a compact size and lightweight, you need these ultra-small nodes. Samsung is targeting 4 nm chips. Intel, which both designs and manufactures chips, has been unable to go below 11 nm in its fabs.
The larger node chips are good enough for use in cars, industrial machines, refrigerators, microwave ovens, sprinkler systems and all the sundry other appliances that now come with chips embedded in them. But not when it comes to the most advanced applications.
Three companies have come forward to set up semiconductor manufacturing plants, and two companies, to set up display fabs, in response to the government’s scheme. While the information technology and electronics minister Ashwini Vaishnaw termed the response ‘superb’, that description sits ill on proposals by newcomers to the world of chipmaking to manufacture silicon with circuits that measure 28 nanometre and upwards, at least seven times as large as what can be described as cutting edge.
Contrary to the eligibility criteria stipulated, two of the contenders have no prior experience in the large-scale manufacture of advanced electronics. This does not mean that these would fail in their attempt to create new facilities that are adequate for the job of producing the chips they plan for. But that does not give India strategic autonomy in advanced silicon.
India will need to develop capabilities in the microprocessor core technology, chip design based on that core and in the machines needed to create a chip foundry. A Dutch company called ASML supplies the basic machinery that uses lasers to etch tiny grooves on to thin wafers of silicon, vaporizes metal to deposit in the grooves to create circuits. Lenses are needed to focus the lasers. How much of these India needs to develop on its own is open to question, but a good deal would need to be.
Is India capable of such technological development and manufacture? Just look at India’s space and nuclear programmes. India has created its own cryogenic rocket engines and a prototype fast breeder reactor, within the government sector, at a time when there was no startup ecosystem that could be tapped to outsource disaggregated chunks of the tech jigsaw puzzle that finally has to be put together to create the self-reliance in advanced semiconductor India needs.
Is it doable? India has the largest workforce in tech, toiling away in India and the rest of the world, tackling R&D problems set by multinational companies and foreign governments. The point is to bring a large enough number of them together, to solve problems identified by the government, with funding from the government and the promise of owning the intellectual property they develop, diluted only to meet the government’s strategic needs.
It is entirely doable, provided we have the ambition and the will.
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