Semiconductors in India:
#GS II #Indian Economy
Topic Indian Economy
Context:
- According to Commerce Secretary Gina M. Raimondo on Thursday, Air India’s decision to purchase 220 Boeing aircraft will result in the creation of a “tremendous number of employment” in the US.
- In remarks to the media today, the visiting official announced that the two countries will sign an MoU on semiconductors, supporting India’s desire to play a significant role in the “electronics supply chain,” a day before the India-US Commercial Dialogue continues.
How do semiconductors function?
- Computers and other electronic devices can be constructed using semiconductors, a material with unique electrical properties.
Importance:
- Almost all modern electronic gadgets, like as smartphones and connected things for the Internet of Things, are built on it (IoT).
- The $500–600 billion international semiconductor market is essential to the $3 trillion global electronics industry.
What are semiconductor chips?
- The conductivities of semiconductors fall in the middle of those of insulators and conductors. They could be single elements like silicon or germanium or mixtures like gallium, arsenide, or cadmium selenide.
Why semiconductor chips are important:
- These basic elements serve as the brain and heart of all modern devices and products utilising information and communications technology.
- These chips are now a common feature of contemporary automobiles, home appliances, and essential medical devices like ECG machines.
- Components of a semiconductor chip The basic unit of a semiconductor chip is a piece of silicon that has been etched with billions of tiny transistors to control the flow of electricity.
- Nowadays, the most cutting-edge semiconductor nodes are those at 3 and 5 nanometers (nm). Automobiles, consumer electronics, and other devices use semiconductors with higher nanometer values whereas smartphones and laptops use those with lower values.
Issues with the industry that makes semiconductor chips:
- Chip shortage caused by pandemic-related plant closures, conflict between the US and China in Taiwan, interruption of the supply chain as a result of the Russia-Ukraine war, and increasing demand.
- The production of semiconductors is very specialised. 90% of the 5nm (nanometer) chips used in the world are produced in considerable quantities by Taiwan Semiconductor Manufacturing Company (TSMC).
- So, all governments are working to create their own domestic chip manufacturing industry.
Activities by the Indian government:
- A $10 billion scheme of production-linked incentives (PLIs) to promote domestic semiconductor and display production.
- Help with funding a design-linked initiative (DLI) programme to encourage domestic and foreign investment in design software, intellectual property rights, etc.
- The “Programme for Development of Semiconductor and Display Manufacturing Ecosystem in India” has undergone changes. A uniform incentive of 50% of the project cost has been granted by the Union Cabinet for the creation of semiconductor, display, and compound semiconductor fabrication facilities.
- An initiative to create facilities for compound semiconductors will be launched by the India Semiconductor Mission (ISM).
- Vedanta and Taiwanese chipmaker Foxconn would invest 1,54,400 crores in the construction of a semiconductor manufacturing facility in Gujarat.
What are the challenges?
- Costly Investments Required: The cost to create a single semiconductor fab ranges from $3 to $7 billion.
- Government financial assistance is scarce.
- Nothing Fab Capable.
- Insufficient grants under the PLI Scheme.
- Low resource industry.
- The process of making chips is expensive and resource-intensive.
- Moreover, the production of chips requires gallons of ultrapure water in a single day.
