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Growth of Semiconductor ecosystem in India

  • IASbaba
  • March 6, 2022
  • 0
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Growth of Semiconductor ecosystem in India

Part of: GS-Prelims and GS-III: Infrastructure & Economy

  • Semiconductor chips are integral parts of the power train, chassis, safety systems, advanced driver assistance systems, and other parts of automobiles.
  • They are used more in passenger vehicles compared to commercial vehicles or two-wheelers
  • The move to electric vehicles has led to increased demand of chips. For example, a Ford Focus typically uses roughly 300 chips, whereas one of Ford’s new electric vehicles can have up to 3,000 chips
  • With supply of semiconductor chips slowing down, the production in the automobile sector is also adversely impacted.

Programme for Development of Semiconductors and Display Manufacturing Ecosystem

The Union Cabinet recently approved a comprehensive program for the development of a sustainable semiconductor and display ecosystem in the country.

  • With an outlay of Rs.76,000 crore (10 billion US dollars), the scheme has incentives for every part of supply chain including electronic components, sub-assemblies, and finished goods.
  • In total, the Government of India has committed support of Rs. 2,30,000 crore (USD 30 billion) to position India as a global hub for electronics manufacturing with semiconductors as the foundational building block.

It will

  • Usher in a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design.
  • Pave the way for India’s technological leadership in these areas of strategic importance and economic self-reliance.
  • Semiconductors and displays are the foundation of modern electronics driving the next phase of digital transformation under Industry 4.0.
  • Semiconductors and display manufacturing is very complex and technology-intensive sector involving huge capital investments, high risk, long gestation and payback periods, and rapid changes in technology, which require significant and sustained investments.
  • Give an impetus to semiconductor and display manufacturing by facilitating capital support and technological collaborations.

Semi-Conductor Shortage

There was a global shortage of semiconductor chips that had started making its effect felt in the small and medium-sized enterprises (SME) sector in India.

  • Rise in Covid-19 cases in supplying countries, especially those in Asia, led to disruption of production (shutdown of factories) thereby causing the current shortage.
  • An atrocious winter storm in Texas shut down semiconductor factories, and a fire at a plant in Japan caused similar delays.
  • Also, relatively low margins of Substrate manufacturing have led to its underinvestment and added to the pain of a global chip shortage
    • Substrates connect chips to the circuit boards that hold them in personal computers and other devices.
    • Made up of thin copper wire sandwiched in resin, substrates help transmit user instructions to a computer’s chips and relay the answers.
    • They are necessary because the ultrathin wiring that comes out of chips can’t tolerate a direct soldered connection to a circuit board
    • Substrate Manufacturing is therefore seen as a backwater of the global chip supply chain.
    • Supplies of substrates is very tight and small disruption in this underinvested sector is causing big worries to chip manufacturers
  • The chief executives of Intel and IBM have both said recently that the chip shortage could last two years.

It is clear today that we have a runway of opportunities in the ESDM (Electronics System Design and Manufacturing) space, in the embedded design space, and of course, the semiconductor space. Our ambitions specifically to the semiconductor space are very clear. It involves big investment in fabs, which is natural – given the geopolitics, but also in the ecosystem around innovation, design and systems.

News Source: PIB

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