Scope of Semiconductors industry 

General Studies Paper -3 

Context: It has been argued that India will become a semiconductor manufacturing hub providing vast employment opportunities.

About Semiconductors 

• A semiconductor is a material product usually composed of silicon.
• It represents a distinct class of materials that possess some of the electrical properties of both conductors and insulators.
• It can be used to control the flow of electric currents, and with exquisite precision.
• Each step-insemiconductor fabrication demands ultra-high precision and harnesses a blend of diverse scientific principles.
  • For example, to make the most advanced transistors, thephotolithography process requires a light source emitting electromagnetic radiation at a wavelength of 13.5 nm.

Major players 

• Dutch companyASML is the sole provider of photolithography machines for cutting-edge semiconductor technology worldwide.
• The American firms dominate the software tools the engineers use to design circuits, while the silicon wafer sector is led by Japan’s Shin Etsu.
• The market for theactual task of fabrication is led by Taiwan’s TSMC, with fabrication tools provided by Applied Materials and Lam Research, both headquartered in the U.S.
• The majority ofintellectual property rights are held by British company Arm.
• The U.S. also imposed sanctions on Chinese tech companies, including bans on the acquisition of cutting-edge ASML equipment and high-end design software, for the same reason.
  • In response, China has intensified efforts to bolster its domestic semiconductor production capabilities to meet local demand.

Status of India

• India boasts a leading role in chip design centred in Bengaluru.
• However, most of the intellectual property rights required to execute these designs are retained either by parent companies or by Arm, relegating India to being a mere user of their products.

Benefits

• Computing: The semiconductor industry produces microprocessors and memory chips, which are the primary components in computers, servers, and data centers. These devices are used in various industries, from finance and healthcare to manufacturing and logistics.
• Communications: Semiconductors are used to produce cell phones, satellite systems, and other communication devices. They are also used to create wireless communication systems, network equipment, and other hardware for data transmission.
• Energy: Semiconductors are used in the production of solar cells and other renewable energy systems. Power management applications also use semiconductors, including voltage regulators and power supplies.
• Automotive: Automotive electronics also use semiconductors, including engine control units, sensors, and safety systems. They are also used in electric vehicles and autonomous vehicles.
• Healthcare: Medical imaging, monitoring, and diagnostic equipment, as well as medical implants and devices, use semiconductors.
• Owing to their role in sectors like defence and automotives, semiconductors have also emerged as a focal point of geopolitical interest, with nations vying to establish semiconductor fabrication facilities within their borders and drawing industry leaders in with a plethora of incentives.

Challenge and Issues 

• The semiconductor industry faces the challenges and opportunities of increased product demand in the immediate future.
• The growth of artificial intelligence (AI) and the Internet of Things (IoT) and the ongoing demands from the smartphone sector and other high-tech industries will place stress on the semiconductor supply chain.
• The challenge will be further complicated by ongoing international trade disputes, which may drive up the cost of semiconductor materials and interfere with global collaboration within the industry.
• India also currently lacks in original research in semiconductor design, where the future of the chip is decided.

Recent steps of Government 

• The Government of India has launched the India Semiconductor Missionto develop a comprehensive semiconductor ecosystem, aiming to position India at the forefront of the global semiconductor industry and bolster youth employment prospects.
• The Union Cabinet recently approved setting up three semiconductor-making units, entailing an investment of Rs 1.26 lakh crore, as part of an attempt to cut India’s dependence on imports to meet the requirements of chips
• Several initiatives have been launched to promote semiconductor production, including the Production Linked Incentive (PLI) scheme for the electronics sector.
• Additionally, the government has introduced the Design Linked Incentive (DLI) and other schemes such as Chips to Startup (C2S)and Scheme for Promotion of Electronic Components and Semiconductors (SPECS) to support the industry.
• the government has launched the “Semicon India program”to address the global chip shortage by encouraging manufacturers to establish their semiconductor industry setups

Conclusion

• Setting up semiconductor fabrication units or fabs requires significant investments and expertise.
• India is seeking a collaborative approach, building partnerships with like-minded nations to facilitate sustainable growth in the industry.
• India’s talent pool is unparalleled, and the country is currently at a crucial point where manufacturing can grow rapidly and efficiently.
• India has the intellectual capacity, determination, and capability to emerge as a leading global research and development hub.

It remains focused on its objective of strengthening the semiconductor industry, which, in turn, will stimulate the growth of the country’s expanding electronics manufacturing and innovation ecosystem.