India currently does not have an ecosystem in place for advanced semiconductor manufacturing. However, conglomerates such as the Tata group and Vedanta have expressed interest in setting up chip operations here, and the government has also received interest from some global firms. Commerce minister Piyush Goyal met executives of American chip companies such as LAM Research and Applied Materials on 8 September to explore greater collaboration with Indian companies.
In April, Applied Materials said it plans to invest $50 million in a new research and development (R&D) facility in India, while Mint reported last month that LAM Research plans to set up its second R&D facility in India this month. “India has already introduced a production-linked incentive (PLI) scheme to attract global clients. Alongside this, it’s not liIndia has no existing ecosystem of the semiconductor industry— the semiconductor laboratory (SCL) in Mohali, Punjab, manufactures semiconductor chips in partnership with local and Israeli suppliers,” noted Vivek Tyagi, chairman of industry body Indian Electronics and Semiconductor Association (IESA)
Rajeev Khushu, adviser and board member of IESA, said that semiconductor supply chain vendors in India do not have the necessary quality to match the global standards required for making the latest generation chips. SCL, foinstance, still makes 180nm chips at its facility.This, according to both Khushu and Tyagi, could see semiconductor fabs come up in India over the next five years as global tech firms look at markets beyond Taiwan, Korea and China to set up advanced facilities. “India has already seen some interest from vendors to set up assembly, testing, marking and packaging (ATMP) facilities in the country based on the semiconductor PLI scheme, which could precede the establishment of chip factories since the latter would take larger sums of invest ment,” Khushu said. Navkendar Singh, associate vice-president at market research firm International Data Corp (IDC) India, said,
“What China has succeeded in doing has been to bring down the pricing of chips, thanks to vastly available and affordable skilled labour and the overall scale of manufacturing. This could be a factor that semiconductor firms struggle to meet in the immediate future.” Singh added that moving the manufacturing of chips away to other markets (including India and the US) could see companies incur a higher cost of manufacturing. “It is also unlikely that any company will ever put all their eggs in one basket again, so India will likely not be the sole beneficiary of the US‘ new law. The overall impact could see India make gains in the semiconductor space in the long run, but it will most likely not be the only nation taking advantage of the diversification of the semiconductor supply chain,” Singh added.