Robust fab ecosystem key to India realising full promise

This is an opportunity for India, and has multiple challenges. The keywords here are: design thinking, system thinking, and end-to-end thinking. We are now talking about a fab. A fab is a small part of the value chain. We now need to be able to design better, and also make an end product. Thanks to the presence of the multinational companies in India, especially, Bangalore, Indian engineers have been able to develop certain necessary skillsets in chip design and verification.

There are three reasons for fabs. The first is the patriotic reason. It will be a proud moment for India to proclaim that it now has semiconductor fabs coming up. Next, is the strategic reason, and supply chain imbalance. India has been lacking fabs so far. By having fabs, India can bridge that gap. We also now need to then look at supply chain imbalance and perhaps, address that. Given the global outpourings against China, we need to relook closer, and hopefully, better, at the supply chain.

nearly 95% of all semiconductors in India is either designed, tested, and verified out of Bangalore, albeit by multinationals, is the toughest act to match.

Who have we joined?

The third is the economic value that a fab can bring. We will now join the likes of Taiwan, Japan, South Korea, China, Singapore, Malaysia, Vietnam, Thailand, Hong Kong, The Philippines, etc. Indonesia has the strategic advantage of having abundant raw materials. Indonesia is also rich in silica sand, a critical component in production of silicon wafers and, consequently, semiconductors.

Indonesia is a chokepoint in the global supply chain for raw materials and semiconductor assembly, testing and packaging (ATP). It finds itself in the same niche as Malaysia and Vietnam, both of whom are more advanced in this sector. In the Middle East, we have fabs in Israel, Saudi Arabia,

Along with these nations, there are countries in North and South America, such as the United States, Mexico, Costa Rica, Brazil, Argentina, etc. Canada has been pushing very strongly. There are a couple of fab centers in Australia too. Europe has several fab centers, such as The Netherlands, Germany, France, Austria, Switzerland, Italy, Czech Republic, Ireland, Finland, Belgium, UK, Hungary, Sweden, Russia, etc.

As per the DPS Group, there are 60 operating fabs in Europe. Seven more are in construction, and eight fabs more are in the planning stages. Two of the seven fabs in construction, and all the eight fabs in the planning stages have been enabled by the European Chips Act.

Last year, Broadcom announced plans to open a chip factory in Spain. This investment has been decided following the launch of the Strategic Project for Economic Recovery and Transformation (PERTE), a specific focus on promoting semiconductor development, called PERTE Chip.

The State Enterprise for Microelectronics and Semiconductors (SEMyS), Spain, was transformed into the Spanish Society for Technological Transformation (SETT) by Royal Decree 676/2024 of 16 July.

Be aware of the fact that about 50 fabs have already been closed, apart from the ones that are named above. Therefore, running a fab is really a very serious business. Only the ‘real men own fabs’, globally.

Where is India?

Right now, still nowhere! India, as mentioned earlier, has to now face up to global challenges. Semiconductors have always been a very cyclic industry. And, India will need to follow the same footsteps. And, that could well mean an Indian company having to open multiple offices across the world. That is another challenge in itself, and may be discussed, as and when that situation arises.

Also, the global semiconductor industry itself has been highly cyclical, subject to periodic booms and busts. Besides investing in the specific companies that manufacture semiconductors, there are also ETFs, index funds, and indices, that focus on either chip makers and chip equipment makers.

Yes, we have been participants in chip design and verification. But, those have nearly all been for the global companies that have presence in India.

The fact that nearly 95% of all semiconductors in India is either designed, tested, and verified out of Bangalore, albeit by multinationals, is the toughest act to match. With India now entering the field, it now has to attract engineers, necessarily, with some experience, for designing, testing, and verifying or validating chips made by an Indian company.

Development of all of these fab facilities can lead to a surge in high-tech manufacturing, design and development that can bring lasting prosperity and growth to various cities and communities where the facilities are based. The Biden administration in the USA, and the EU had envisioned all of that when they passed their legislation on the CHIPS Acts.

Therefore, we now need to have to enable the startup ecosystem to have an innovation mindset. All these days and years, Indians were only busy designing, testing, and verifying chips. Now, they need to come to their work with an innovative mindset. That way, India can bring some value to the global ecosystem.

There are several other factors to be considered. First, comes the RoI. If there is no RoI, the semiconductor fab projects can be unsuccessful. Next, the acceleration factor of the multiple engineers required is unmeasurable. Also, most of them have to be properly trained, as there are ‘no freshers’ really, in semiconductors, and more, for fabs.

Next, we also need to make the upcoming fabs successful. Further, India will be needing a lot of clean water and electricity for fabs. That reminds me of an episode. Back in 2015, I was approached by a company at Connaught Place, New Delhi, at the possibility of starting a fab in India. After several hours of deliberations, the main points came to the table. One of them was clean water. There, the conversation stopped!

Japan, and Stars Microelectronics, Thailand, will set up an ATMP unit for specialized chips in Sanand, Gujarat. Also, TCS and TEPL aim to launch the first indigenous semiconductor chips in 2026.

Well, India needs to relook at providing lots of clean water for fabs. This can also become a profitable business now, for those looking to invest. I cannot comment on the electricity supply, but I am hoping that sense will finally prevail.

Further, we need to have a look at the semiconductor patents that are coming out from India, and increase that. We need to start reshaping computing, communications, networking, security, and applications landscapes, if we are keen on moving ahead.

We also need to be looking at new packaging materials, and materials themselves. What can India do? We also have the opportunity as we are looking at chiplets, 3D-ICs, etc. We currently have the challenge of ‘how do we design’? We don’t need to worry about FinFET right now. The majority of silicon that would get produced in India would be on the mature nodes. That is 28nm and above!

OSATs or outsourced semiconductor assembly and test companies currently have about 5% of the talent. On the fab side, we don’t have that many. We need to build on that. The India Electronics & Semiconductor Association or IESA is busy in creating programs for companies and OSATs, as well as universities. We are also creating the necessary curriculum. We need to have to come up in skills and challenges. We need to build the skillsets. We will now need much better diploma holders, technicians, etc.

India will probably need to introduce more tutorials in semiconductors. We should no longer be happy with what is chip design? We would now need classes on how to chip design more efficiently and effectively? Or, what materials will make chips more powerful? We probably have the faculty to do that. Also, India will need to build relationships globally. Apart from that, we also need skills for the manufacturing side. 3D ICs allow a company to design the right way. We also now need to own the chips. India is a market that can run fabs to capacity. We also need to be innovative going ahead. However, as mentioned earlier, all of these skills will be needed for semiconductor chips that are 28nm and above.

Who have joined?

So far, the India Semiconductor Mission (ISM) has approved five semiconductor units that will receive central and state government subsidies under the program for development of semiconductors and display manufacturing ecosystem in India with a total outlay of `76,000 crore.

In June, 2023, Union Cabinet approved proposal of Micron Technology for setting up a semiconductor memory unit in Sanand, Gujarat. Tata Electronics Pvt Ltd (TEPL), in partnership with Powerchip Semiconductor Manufacturing Corp (PSMC), Taiwan, will have a semiconductor fabrication unit on Dholera, Gujarat, with 50,000 wafer starts per month capacity.

Tata Semiconductor Assembly and Test Pvt Ltd (TSAT), will set up a semiconductor ATMP unit in Morigaon, Assam. CG Power, in partnership with Renesas Electronics Corp., Japan, and Stars Microelectronics, Thailand, will set up an ATMP unit for specialized chips in Sanand, Gujarat. Also, TCS and TEPL aim to launch the first indigenous semiconductor chips in 2026.

Kaynes Semicon, a Mysuru-based company, received an approval from Union Cabinet for setting up an OSAT facility in Sanand, Gujarat. Its technology partners AOI Electronics, Japan, Aptos Technology, Taiwan, and Globetronics Technology, Malaysia, will supply wafers and source chip requirements from Kaynes. Mitsui & Co., Japan, will supply raw materials and gases need for chip-making.

Projects in the pipeline include Tower Semiconductors, in partnership with Adani Group for analog/mixed signals, and semiconductor manufacturing, in Taloja, MIDC, Panvel, Goa. Suchi Semicon will begin production at its Surat, Gujarat, OSAT in November 2024.

As per reports, Foxconn Technology Group and HCL Group, have applied for OSAT JV. Another JV between Advanced System in Package Technologies (ASIP) and Korea’s APACT Ltd has applied for OSAT. Tarq Semiconductors has sought approval for an ATMP facility and a compound semiconductor unit.

Larsen & Toubro Ltd plans to invest over US$300 million in establishing a fabless chip company in India. It aims to design 15 products by 2027, aligning with India’s goal to reduce semiconductor imports and build local capacity.

Sahasra Semiconductor will begin commercial production of the first made-in-India memory chips at its Bhiwadi plant. The semiconductor ecosystem in India is also being strengthened by emerging startups such as Saankhya Labs, Mindgrove Technologies, Terminus Circuits, Morphing Machines, FermionIC Design, Oakter, Agnit Semiconductors, Incore Semiconductors, SignOff Semiconductors, Cientra, Silizium Circuits, Aura Semiconductor, Vervesemi, Sensemi, and Netrasemi.

As mentioned, all of these projects are for 28nm and above. The even more real challenges will appear, as we go below, to 22nm, 18nm, 10nm, and beyond, to say, 1/2/3nm.

US President, Joe Biden, and Indian PM, Narendra Modi, recently hailed a watershed arrangement to establish a new semiconductor fabrication plant focused on advanced sensing, communication, and power electronics for national security, next generation telecommunications, and green energy applications.

Larsen & Toubro Ltd plans to invest over US$300 million in establishing a fabless chip company in India. It aims to design 15 products by 2027, aligning with India’s goal to reduce semiconductor imports and build local capacity.

In a landmark agreement, India and the US have signed a deal to establish a new semiconductor fabrication plant in Jewar, Uttar Pradesh. This cutting-edge facility, named ‘Shakti’, will be the first of its kind in India and one of the world’s first Multi-material Fab for national security. The announcement was made on September 21, 2024, in a joint statement released by the White House after a meeting between Prime Minister Narendra Modi and President Joe Biden in Delaware.

The semiconductor fab, which will be established with the objective of manufacturing infrared, GaN and SiC semiconductors, will be enabled by support from the India Semiconductor Mission, and strategic technology partnership among Bharat Semi, 3rdiTech, and the US Space Force.

GlobalFoundries’ (GF) creation of GF Kolkata Power Center in Kolkata, India, will enhance mutually beneficial linkages in R&D for chip manufacturing

India Semiconductor Mission-2 may focus on compound fabrications, silicon photonics, etc. The second phase will aim to bring electronic component companies, raw material suppliers, and others in the semiconductor ecosystem to India. The Indian electronics industry also wants the government to focus on boosting display manufacturing in the country.

That, itself, calls for separate stories!

pradeepc@cybermedia.co.in