By Ritu Jha-
India has long been a global leader in semiconductor chip design, but U.S. chip maker Micron’s plans there signal a coming change in the Asian nation.
Micron last year announced plans to build a $2.75 billion chip manufacturing plant in Gujarat, a venture that it isn’t going alone. Micron will spend $825 million, while the rest will come from the Indian government’s new $10 billion India Semiconductor Mission (ISM).
India’s consul general in San Francisco, K. Srikar Reddy[Above center], spoke about the ambitious initiative at the recent SEMICON West 2024. Reddy says Micron will start operations soon and is one of four companies selected under the new scheme.
Tata Electronics is setting up an $11 billion manufacturing plant. in collaboration with a Taiwanese company called Powerchip Semiconductor Manufacturing Corp. Tata also is setting up an assembly, testing and packaging facility in Assam with an investment of $3.25 billion. Another company, CG Power, is setting up an ATP plant in Gujarat in collaboration with Japan-based Renaissance.
Going deeper into India’s fast-evolving semiconductor ecosystem, Reddy agreed to sit down with indica on the sidelines of the event.
Question: Why is India making this move now?
Answer: India is very strong currently in the R&D sector. Around 20% of the global design engineers operate from India. We have around 125,000 engineers. All the top 25 semiconductor companies have their design facilities in India. Texas Instruments was the first company to set up a design center in India and Bengaluru in 1985. Bengaluru is the hub for design engineers. We have all the major companies from the US, like Nvidia, Qualcomm, Micron, Intel, and Infineon Technologies, all the global majors are also there, and 3000 integrated circuits are designed every year in India.
Recently there were new announcements of Lam Research, Applied Materials, and AMD projects. Lam Research is already there in India in the design field for their equipment. But now they are partnering with the Indian Institute of Science, Bengaluru, to train 60,000 Indian engineers in the Semiverse platform over 10 years. In Applied Materials, 25% of their design engineers are in India. Applied Materials have announced that it will build an engineering center in Bengaluru focused on developing and commercializing technologies for semiconductor manufacturing equipment with an estimated total investment of $400 million over four years.
Q: Can India provide enough labor to staff these new manufacturing plants?
A: There’s a shortage of skilled manpower across the world. But in India, we see it as an opportunity because we have 800,000 STEM graduates, especially engineers, passing out of various institutes every year. So now the government has tied up with companies like Cadence & Synopsys and Siemens who provide software for training for chip design automation. Licenses have been procured by the government for this and provided to over 100 universities. This is in addition to the 60,000 people who will be trained by Lam Research in collaboration with the Indian Institute of Science in their Semiverse platform. We expect 85,000 people will be available in India by 2026 to start working in these new facilities.
Q: Is India moving from service to chip industry?
A: Prime Minister Modi has a vision to make India a global manufacturing hub for high-tech industries. In 2020-21 the government came up with a lot of production incentive schemes for various sectors including mobile phones, automobiles, pharmaceuticals, and medical devices. In 2022, we were importing around $67 billion worth of electrical and electronic products, out of which, 15 billion are semiconductors. During COVID, issues related to the supply chain cropped up. That is why the government came up with this scheme to support the supply chain and to make India a hub for high tech manufacturing. Already 25% of the Apple mobile phones are being manufactured in India. That includes export. India has become the second-largest mobile phone manufacturer in the world with a 19% global share. We expect the mobile phone industry to become $300 billion by 2026.
By 2030, the semiconductor market in India is expected to touch $100 billion, which will be 10% of the overall global $1 trillion market. The government wants to develop a comprehensive semiconductor ecosystem that is robust, resilient and diverse. All the end products like circuits will be directly consumed by the companies which are manufacturing electronic products or mobiles in India.
Q: How much are companies still opting for China and Taiwan for chip manufacturing?
A: This is a very unique opportunity for India when the big global multinational corporations are looking to diversify their supply chain. India has a lot of positives – ease of doing business, investments in improving logistics, especially in ports, and railroads. We also have a single window scheme for clearances. In the semiconductor sector, for example, the state government of Gujarat is setting up a semicon city in Dholera. It’s spread over an area of 10,000 acres with excellent infrastructure facilities and a continuous supply of electricity and water requirements for the next 10 years.
Q: What is the Indian government’s vision for the next 25 years?
A: Whatever policies we are bringing, especially for the semiconductor industry, are forward-looking. We are going to host the SEMICON India in September and we are taking help from all the experts in the world like they are part of the Indian semiconductor mission. Last year they held SEMICON India in Gujarat. This is the second time and it will be held in New Delhi. In the last SEMICON India there were over 600 companies that participated. We had over 40,000 visitors. This year, we expect more companies to exhibit in Delhi because last year we had only one investor, Micron, but this time we have three more companies whose investments have been approved. There is a lot of interest from various companies not only in the FAB manufacturing and ATP assembly but also in other areas like the raw materials, and components. Chip manufacturing requires a lot of specialty chemicals, gasses, and substrates. The government is also encouraging companies to set up in the raw material and equipment sectors, especially companies that manufacture equipment.
Q: Is there collaboration with the U.S. government?
A: We have a Memorandum of Understanding for the semiconductor supply chain and innovation partnership. The MoU was signed in March last year and it will encourage synergy between companies on both sides and explore means to collaborate in supply chain resilience.
We are collaborating with Purdue University and they are coming up with some online courses and hybrid courses that will train Indian engineers in fabrication, packaging, and design. We also have this Indo Pacific Economic Framework for Prosperity (IPEF) supply chain agreement which was signed in November last year in San Francisco. It also provides a framework for collaboration of these 14 partner countries to deal with supply chain crises, especially to prevent, mitigate and also be ready to face any crises. We would like to establish more such collaborations in the US. Under the CHIPS and Science Act, there are a couple of funds including one for international technology security consisting of $500 million. We hope that means we can collaborate with the US to come up with some research and design centers.
There’s also a $200 million fund for workforce development under the Chips Act. We hope the US can collaborate with India to develop a common curriculum and training modules and also facilitate the exchange of Master’s and PhD students. Indian talents can be utilized by the US also because I understand there is a shortage of 80,000 engineers here and there will be 1.5 million job openings in the next 10 years. We are looking to partner with various universities and institutions for technology.
Q: Can India compete with China for chip manufacturing?
A: It is a very opportune moment for India to ensure the semiconductor manufacturers come and invest in India. It is a win-win situation for the investors. We have the talent, research, and design and the government is giving huge incentives. And there is a huge domestic market. The manufacturers have got a ready-made, captive market in India, in addition to whatever they can export. There are a lot of advantages in coming to India, not only in manufacturing but also in acquiring a market advantage.
[Photo caption: CEO of SEMI, Ajit Manocha,[left] with Dr. K. Srikar Reddy, consul general of India in San Francisco and Jennifer Boger, director, the Office of Information and Communication Technologies, U.S. Department of Commerce at SEMICON West 2024. Photo courtesy, indica]
