With the Lok Sabha elections looming on the horizon, Prime Minister Narendra Modi has expressed confidence in his return for a third consecutive term. Whether that becomes a reality or not, remains to be seen but regardless, Modi’s legacy in the past 10 years has been a subject of extensive debate.
While Jawaharlal Nehru is credited for India’s democratic and secular values, Narasimha Rao for spearheading the economic reforms of 1991, and Atal Bihari Vajpayee for establishing India as a nuclear power, many would argue that Modi would be remembered for the Ayodhya Ram Temple.
However, his real contribution towards the nation could be ushering the country into the era of semiconductor manufacturing. On February 29, the government approved the first semiconductor fabrication unit to be established on Indian soil.
India’s past endeavour with semiconductor
This marks a historic day for India because the quest to fabricate semiconductors in the country is more than half-a-century old.
In the 1960s, Fairchild Semiconductors, a prominent semiconductor company of that era, expressed interest in establishing operations in India. However, bureaucratic hurdles and various challenges ultimately compelled them to relocate to Malaysia.
Subsequently, multiple administrations have endeavoured to initiate semiconductor manufacturing in India. Regrettably, none of those yielded positive results until the present moment.
More recently, the Congress government under Manmohan Singh, had also tried to lure chip manufacturers in the country. In 2007, the Singh-led administration released the semiconductor policy with the objective of attracting INR 24,000 crores worth of investments.
Back then, Singh famously said that it is essential to develop semiconductor fabrication capabilities to support the information and communication technology sector in the country.
The government engaged in discussions with major players such as Intel and AMD, with the latter entering into a licensing agreement with SemiIndia, a consortium of technology firms based in Hyderabad.
Nevertheless, none of these discussions yielded tangible outcomes due to bureaucratic hurdles, unfavourable business conditions for foreign companies, and the lack of government support.
Interestingly, then Intel chairman Craig Barrett said that the Indian government was a bit slow in coming out with its semiconductor manufacturing proposal and “missed the window of our period of time that we had to commit our next tranches of manufacturing capacity. That is a fact. That is the story”.
Modi’s Semiconductor Legacy
During his second term, Modi and his ministers significantly pushed to remove the bottlenecks, established the Semiconductor India Mission (ISM) and announced USD 5 billion in incentives for those setting up fabrication units in the country.
In 2022, Modi approved three proposals, most notably the Foxconn-Vedanta joint venture (JV), yet neither of these materialised. However, as things stand, the semiconductor plant in Dholera set by Tata Electronics in partnership with PSMC, could tape out its first chips by 2026.
Given the repeated failures of his predecessors, managing to bring chip manufacturing companies into the country would without doubt be one of Modi’s biggest achievements in his long stint as the Prime Minister of India.
Notably, Micron has already announced investments worth USD 2.75 billion to set up an assembly and test facility in Gujarat.
Moreover, along with the Tata-PSMC plant, the government also approved the CG Power-Renesas outsourced assembly and test (OSAT) facility at Sanand, Gujarat, and the Tata OSAT unit at Morigaon, Assam.
Semiconductor chips power almost all electronic gadgets in the world from computers, smartphones, cars, aeroplanes to military devices. However, only a few countries today have the capability to fabricate these chips.
“Imagine if all advanced strategic (space, defence, and what can affect human lives) technologies are dependent on these chips, and if the countries supplying chips to us suddenly stopped exports to India, what would we do?,” Mayank Shrivastava, a professor at the Indian Institute of Science, had told AIM earlier.
Hence India’s pursuit of semiconductor manufacturing is driven by a strategic imperative to enhance its national security, bolster its economy and foster technological self-reliance.
Semicon industry to kick off in Modi’s 3rd term?
The semiconductor ecosystem could really kick-off during Modi’s potential third term, if he gets re-elected. The government is poised to unveil new fab initiatives, and there are reports indicating that Tower Semiconductor could be next, as the Israeli chip company is actively seeking an investment partner to establish a fabrication unit in India.
According to Union Minister Ashwini Vaishnaw, chips manufactured or packaged in India will not only cater to domestic demand but also address the requirements of foreign countries.
Moreover, chips fabricated in India will also give India’s manufacturing ambitions a significant boost. Over the years, along with semiconductors, the Modi administration has also heavily emphasised the importance of manufacturing electronics locally – be it smartphone components or flatscreen televisions.
India is far away from locally producing the 5 nm or 3 nm nodes chips currently powering some of the most advanced smartphones or laptops. However, the Tata-PSMC fabrication unit will be capable of manufacturing chips at 28nm, 40nm, 55nm, and 110nm nodes, which are used for power management, display drivers, and microcontrollers, among other things.
Achieving the fabrication of 28 nm or 40 nm chips domestically in India would mark a significant milestone. Subsequently, progress towards more advanced nodes like 5 nm or even 3 nm could be pursued over time.
Moreover, under Modi’s leadership, efforts are also being made to modernise the already existing Semiconductor Lab (SCL) in Mohali.
Whether this vision materialises or not is uncertain, but Modi’s initiative to kickstart this endeavour could be remembered by future generations for establishing India’s presence in the semiconductor industry.
