- Mains – GS 3 (Indian Economy)
Context: Semiconductor fabrication represents the ultimate frontier of human tech advancement.
- Semiconductors are materials that have electrical conductivity between that of a conductor
- Copper is a good conductor and Rubber is an insulator.
- This means that semiconductors can conduct electricity, but not as well as conductors, and they can also act as insulators, but not as effectively as insulators.
- This property allows for the creation of electronic components with specific electrical properties; enable the design of complex circuits and devices.
- Semiconductors are typically made from materials such as silicon, germanium, and gallium arsenide.
India’s semiconductor sector:
- The country’s electronics and semiconductor products manufacturing sector has witnessed a quantum growth in the last almost a decade.
- Import and manufacturing:
- In 2014, some 92% of the mobile devices sold in the country were imported while in 2022 some 97% of mobile devices were manufactured in the country.
The global semiconductor industry:
- The global semiconductor industry is currently valued at $500-$600 billion and caters to the global electronics industry currently valued at about $3 trillion.
- The chip-making industry is a highly concentrated one, with the big players being Taiwan, South Korea and the U.S. among others.
- 90% of five nm (nanometer) chips are mass-produced in Taiwan, by the Taiwan Semiconductor Manufacturing Company (TSMC).
Applications of semiconductors:
- Electronic devices: Semiconductors are the basis transistors, diodes, integrated circuits, microprocessors, and memory chips, which are used in electronic devices such as computers, smart phones, televisions, radios, and more.
- Solar cells: They are used in manufacture of solar cells, which convert sun light into electricity.
- Lighting: They are used in light-emitting diodes (LEDs) to produce energy-efficient lighting.
- Sensors: They are used in power-electronics, which are used to control and convert electrical power.
Challenges associated with the industry:
Setting up of Semiconductor fabs:
- Semiconductor fabrication represents the ultimate frontier of human tech advancement. However, the progress of miniaturisation is accompanied by higher complexity and costs.
- Investment in a semiconductor fab is one of the riskiest. Billions of dollars need to be recovered before the technology becomes obsolete.
Challenges of chip manufacturing:
- Developing an ecosystem for chip manufacturing in a Greenfield location is a major challenge.
- Hundreds of chemicals and gases are required for chip fabrication, people need to be trained, and abundant clean water be made available. Above all is the art of chip making.
- Despite the best of equipment, poor quality and low yields can make fabs fail.
Need for an advanced technology:
- There are other issues, such as whether to set up a logic/processor, memory or analog fab.
- Electronic equipment and its functionalities are characterized by their logic chips, which are therefore strategically important and generate the highest profit.
- The most advanced set of technologies is needed to manufacture them.
China’s monopoly in the sector:
- Elaborating on the opportunities for India currently, he said electronics and semiconductor products today was a $1.5 trillion industry with China solely accounting for almost 75% of it and having enjoyed a monopoly in the sector for over two decades now.
Lessons for India from China:
- Acquiring existing fabs offers several advantages, including reasonable pricing, established technology, a supply chain ecosystem, an existing product line, and an established market.
- By acquiring these fabs, India can build its fab ecosystem and train its human resources.
- Moreover, lower subsidies would be required for such acquisitions, allowing the saved funds to be utilized for advanced research and development (R&D) in fab technologies.
- This, in turn, would contribute to the development of a state-of-the-art fab in the coming years.
- Another strategy is the establishment of Assembly, Testing, Packaging, and Marking (ATMP) facilities.
- Tessolve, which is now owned by the Tatas, set up an ATMP in 2013-14.
- This ATMP has been successful in packaging chips with a feature size of up to seven nm. China, on the other hand, has more than 100 ATMPs.
India’s pursuit of a semiconductor fab faces various challenges and uncertainties. By examining the reasons behind past failures and considering alternative approaches, India can learn valuable lessons from China’s successful semiconductor industry.
Acquiring existing fabs, developing ATMPs, and investing in advanced R&D can help India establish a robust fab ecosystem and compete in the global chip warfare. The urgency to act now, despite trailing China in this journey, remains crucial for India’s future success in the semiconductor industry.
Source: The Hindu