{"id":4580,"date":"2022-10-07T00:00:00","date_gmt":"2022-10-07T00:00:00","guid":{"rendered":"https:\/\/www.nextias.com\/current_affairs\/uncategorized\/07-10-2022\/semiconductor-ecosystem-in-india\/"},"modified":"2022-10-07T00:00:00","modified_gmt":"2022-10-07T00:00:00","slug":"semiconductor-ecosystem-in-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/07-10-2022\/semiconductor-ecosystem-in-india","title":{"rendered":"Semiconductor Ecosystem in India"},"content":{"rendered":"<p><span style=\"font-size:13pt\"><span style=\"font-family:\"Book Antiqua\",serif\"><strong>In Context\u00a0<\/strong><\/span><\/span><\/p>\n<p><span style=\"font-size:12pt\"><span style=\"font-family:\"Book Antiqua\",serif\">Electronics industry is critically dependent on <\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:\"Book Antiqua\",serif\"><strong>Semiconductors.<\/strong><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">India\u2019s National Policy on Electronics (NPE) 2019 aims for the electronics industry to achieve a turnover of about Rs 33 lakh crore by 2025.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size:13pt\"><span style=\"font-family:\"Book Antiqua\",serif\"><strong>Potential of Semiconductor industry<\/strong><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><strong>Semiconductors are critical technological components<\/strong><\/span><span style=\"font-size:12pt\"> for emerging technologies viz. artificial intelligence (AI) and internet of things applications, 5G communications, cloud computing, automation, electric vehicles, with a wide coverage of applications from basic consumable electronic gadgets and automobiles to areas of strategic operations.<\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">They help give computational power to devices.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">India&#8217;s semiconductor component market is likely to reach <\/span><span style=\"font-size:12pt\"><strong>$300 billion in cumulative revenues by 2026,<\/strong><\/span><span style=\"font-size:12pt\"> as &#8216;Make in India&#8217; and PLI schemes will boost local sourcing of semi-components in the coming years, according to the report by the India Electronics &#038; Semiconductor Association (IESA) and Counterpoint Research.<\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">According to the Electronics and IT Ministry, semiconductor demand in India would increase to<\/span><span style=\"font-size:12pt\"><strong> $70-$80 billion by 2026 <\/strong><\/span><span style=\"font-size:12pt\">with the growing demand for digital devices and electronic products.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size:13pt\"><span style=\"font-family:\"Book Antiqua\",serif\"><strong>Challenges\u00a0<\/strong><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">COVID 19 Pandemic : <\/span><span style=\"font-size:12pt\">It has brought to the fore the fragility of the global supply chain of semiconductor manufacturing.\u00a0<\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">The situation is exacerbated by the overdependence of the world on East Asia for fab manufacturing, the rising price of silicon, and the China-U.S. trade war.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><strong>India does not have an ecosystem<\/strong><\/span><span style=\"font-size:12pt\"> in place for <\/span><span style=\"font-size:12pt\"><strong>advanced semiconductor manufacturing.<\/strong><\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><strong>Lack of investments and supportive government policies <\/strong><\/span><span style=\"font-size:12pt\">are some of the challenges to set up fabs in India<\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><strong>Inadequate logistics and absence of proper waste disposal<\/strong><\/span><span style=\"font-size:12pt\"> have further exacerbated the poor state of its production.\u00a0<\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">Russia -Ukraine Conflict\u00a0 : <\/span><span style=\"font-size:12pt\">The conflict impacted the supply of neon and hexafluorobutadiene gases.\u00a0<\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">These gases are essential for manufacturing semiconductor chips used in the lithography processes for chip production, and Russia and Ukraine are the major sources of these gases.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span style=\"font-size:13pt\"><span style=\"font-family:\"Book Antiqua\",serif\"><strong>Government\u2019s Initiatives\u00a0<\/strong><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">In December 2021, India announced its roughly $10 billion dollar <\/span><span style=\"font-size:12pt\"><strong>production-linked incentive (PLI) scheme<\/strong><\/span><span style=\"font-size:12pt\"> to encourage semiconductor and display manufacturing in the country.\u00a0<\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">It also announced fiscal support for a <\/span><span style=\"font-size:12pt\"><strong>design-linked initiative (DLI) scheme t<\/strong><\/span><span style=\"font-size:12pt\">o drive global and domestic investment related to design software, IP rights etc.<\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">The PLI and DLI schemes had attracted many global semiconductor players for setting up fabs in India\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">The new changes announced recently seek to harmonise government incentives for all technology nodes of semiconductors.\u00a0<\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">The modified programme would expedite these investments and bring in more applicants.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span style=\"font-size:13pt\"><span style=\"font-family:\"Book Antiqua\",serif\"><strong>Conclusion and Way Forward\u00a0<\/strong><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">Government needs to <\/span><span style=\"font-size:12pt\"><strong>incentivise more FDI in electronics<\/strong><\/span><span style=\"font-size:12pt\"> to deepen our supply chains through incentive schemes,\u00a0<\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">We need to focus on e<\/span><span style=\"font-size:12pt\"><strong>ncouraging Indian manufacturers<\/strong><\/span><span style=\"font-size:12pt\"> and start-ups to enter and master comple<\/span><span style=\"font-size:12pt\"><strong>x R&#038;D and manufacturing verticals.<\/strong><\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">Chip-making also requires gallons of <\/span><span style=\"font-size:12pt\"><strong>ultrapure water<\/strong><\/span><span style=\"font-size:12pt\"> in a single day, which could be a task for the government to provide to factories.<\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">Besides, an <\/span><span style=\"font-size:12pt\"><strong>uninterrupted supply of power<\/strong><\/span><span style=\"font-size:12pt\"> is central to the process, with just seconds of fluctuations or spikes causing millions in losses\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">Another task for the government is to drive up consumer demand in the semiconductor industry to not end up in a situation where these ventures remain successful only till taxpayers are forced to fund required subsidies.<\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\"><strong>Diplomacy <\/strong><\/span><span style=\"font-size:12pt\">can also play a crucial role in semiconductor business.\u00a0<\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">A global platform such as Quad can come forward to collaborate and put resources in research, technological know-how, access to critical technologies and materials logistics and other market support.<\/span><\/li>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">Cooperation with consortium like ASEAN, a political and economic union of 10 member-states in Southeast Asia can further help to ameliorate the supply constraints with regard to semiconductor chips<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">The Russia-Ukraine conflict served as a lesson. We need to be robust on the industry-supporting infrastructure front, so the supply chains are not disturbed<\/span><\/li>\n<\/ul>\n<div>\n<table cellspacing=\"0\" style=\"border-collapse:collapse; border:none; table-layout:fixed; width:624px\">\n<tbody>\n<tr>\n<td style=\"background-color:#d9ead3; border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top\">\n<p style=\"text-align:center\"><span style=\"font-size:13pt\"><span style=\"font-family:\"Book Antiqua\",serif\"><strong>Mains Practice Question<\/strong><\/span><\/span><\/p>\n<p><span style=\"font-size:12pt\"><span style=\"font-family:\"Book Antiqua\",serif\"><strong>[Q]<\/strong><\/span><\/span><span style=\"font-size:12pt\"><span style=\"font-family:\"Book Antiqua\",serif\">As demand for chips sustains globally, India is taking steps towards developing a semiconductor ecosystem.Discuss\u00a0\u00a0<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>In Context\u00a0 Electronics industry is critically dependent on Semiconductors. India\u2019s National Policy on Electronics (NPE) 2019 aims for the electronics industry to achieve a turnover of about Rs 33 lakh crore by 2025. Potential of Semiconductor industry Semiconductors are critical technological components for emerging technologies viz. artificial intelligence (AI) and internet of things applications, 5G [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4581,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22],"tags":[26,46],"class_list":["post-4580","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-editorial-analysis","tag-gs-3","tag-indian-economy-related-issues"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2023\/07\/5078400Screenshot_20221007-123332_Android System.jpg","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/4580","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=4580"}],"version-history":[{"count":0,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/4580\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/4581"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=4580"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=4580"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=4580"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}