From the smartphone in your hand to your home’s refrigerator, TV, AC, your car and even the country’s missiles, they all have one thing in common and that is semiconductor chips. This small chip is the brain of every electronic machine, but the surprising thing is that even today India buys most of the chips it needs from abroad. Now the government wants to change this picture. Modi cabinet has approved Semicon 2.0. Rs 1.27 lakh crore will be spent on this mission in the next six years.
What is Semicon 2.0 after all? Why is so much money being invested in this? How will this benefit the common man and can India really become the world’s largest chip manufacturer? Let us understand in simple language.
Why is a small chip such a big deal?
The chip is as small as it looks, but this chip is the brain of any electronic device. Mobiles, laptops, cars, aircraft, medical machines, 5G networks, satellites and missiles require chips everywhere. However, chip making is counted among the most difficult and most expensive tasks in the world. This requires a factory worth billions of dollars, dust-free clean rooms, machines worth thousands of crores and years of experience. This is the reason why today the most modern chips are mainly made in a few countries like Taiwan, South Korea and America.
During Covid, when there was a chip shortage in the world, car buyers in India had to wait for several months. Many companies had to stop production. Only then did the world understand how dangerous it is to depend on a few countries for an important thing like chips.
What is Semicon 2.0?
Understand it like this. In the year 2021, the government started Semicon India Programme. At that time a provision of about Rs 76 thousand crores was made. The objective was to set up a chip manufacturing factory and chip packaging unit for the first time in India. Now Semicon 2.0 is the next and bigger phase of that mission.
This time the government does not want to be limited to just setting up a chip factory. The goal is that the entire Semiconductor Value Chain should be developed in India, that is, not only chips, but everything from chip making machines, silicon wafers, photoresist, specialty gases, chemicals, research, design and training of engineers should be developed in India. The scheme will run for six years and its detailed guidelines are expected to be released in the next few weeks.
Where will Rs 1.27 lakh crore be spent?
The government has divided the entire scheme into six big parts.
- The first part will be for Chip Design. In this, startups and Indian companies will get financial help, so that they can design their own chips.
- The second part will be for those companies which will make machines used in chip making, chemicals, specialty gases and other essential goods in India.
- The third part will be for setting up a new Semiconductor Fab i.e. chip manufacturing factory.
- The fourth part will be spent on the expansion of Packaging, Testing and Assembly Units.
- The fifth part will be for research and development on new technology.
- The sixth part will be spent on training and skill development of engineers.
What will the government get from this?
The government is not considering it as an expenditure but as an investment. The government estimates that this scheme will bring new investment of about Rs 4 lakh crore. Also, chips worth about Rs 2 lakh crore can be produced and chips worth about Rs 1 lakh crore can be exported, which means the government is trying to create a complete semiconductor industry in India.
What happened till now?
It is not that everything has to start yet. In the first phase, the government has approved 12 big projects, in which investment of more than Rs 1.64 lakh crore has come. Work has started on packaging units of companies like Micron, Kaynes and CG Semi. CG Semi’s unit has also been inaugurated in Sanand, Gujarat.
The most important project is Tata Electronics’ Silicon Fab being built in Dholera, Gujarat. The government aims to produce India’s first Made-in-India Silicon Chip from here by 2028. At the same time, HCL and Foxconn are jointly setting up a unit to make Display Driver Chip in Jewar Airport area near Delhi-NCR.
What is the difference between Strategic Chip and Commercial Chip?
The government is focusing on two types of chips. The first are Strategic Chips. They are used in missiles, radar, defense equipment, secure communication and space programs. The government wants that India should not depend on any other country for these chips. The second one is Commercial Chips. These are the same chips which are used in mobiles, cars, TVs, fridges, ACs, telecom networks and other electronic devices.
Mobiles are being made in India, then why the need for chips?
Today India has become the second largest mobile manufacturing hub in the world. Most of the mobiles sold in the country are assembled in India, but their most expensive and most important part i.e. Processor Chip still comes from abroad. In such a situation, along with mobile manufacturing, the government is also emphasizing on chip manufacturing.
What kind of chip will India make?
Initially, Indian fabs will make chips ranging from 28nm to 110nm. Actually, the smaller the Nanometer (nm), the faster, modern and power-saving the chip will be. Chips ranging from 28nm to 110nm are sufficient for cars, TVs, refrigerators, telecom, industrial machines and defense equipment. At the same time, chips like 7nm, 5nm, 3nm and 2nm used in premium smartphones are currently manufactured in only a few countries of the world. The government aims that by 2035, India should also develop the capacity to make such state-of-the-art chips.
Why is this important for vehicles and 5G networks?
Today’s car is often called a computer on wheels. A modern electric car has thousands of chips installed in it. This chip controls the battery, camera, sensors, airbags, braking system and other safety features. Similarly, 5G networks, mobile towers and data centers also cannot run without chips. The government wants India’s initial fabs to cater to the needs of these sectors first.
What benefit does the common man get from this?
The biggest benefit of this scheme can be seen in the form of employment. Thousands of direct and millions of indirect jobs can be created in new factories, packaging units and their associated supply chains. Chip Design can become a big career option for engineering students. The second advantage will be that if there is another chip crisis in the world in future, then its impact on India will not be as much as before. With this, the supply and prices of cars and electronic goods can remain more stable. The third benefit will be national security. If important chips of defense sector are made in India then dependence on foreign countries will be reduced.
What are the biggest challenges?
- This path is not easy. It costs 10 to 20 billion dollars to set up a modern semiconductor fab.
- The second challenge is of technology. Even today, only a few companies in the world have the technology to make 7nm and smaller chips.
- The third challenge is that of experienced experts. There are engineers in India, but the experience of running a state-of-the-art fab is still limited.
- The fourth challenge is of electricity and water. The chip factory needs 24-hour uninterrupted electricity and ultra-pure water. Even a power cut of a few seconds can cause loss worth crores of rupees.
- Apart from this, America, China, Japan and Europe are also attracting companies to invest in them by giving subsidies worth billions of dollars.
What to keep an eye on next?
Now three things will be most important. First – Detailed guidelines of Semicon 2.0, which will know what kind of help the companies will get. Second – 2028, when India’s first Made-in-India Silicon Chip is targeted to be produced from Dholera in Gujarat. Third, 2035 – When India is aiming to achieve the capability of manufacturing the world’s most modern chips like 3nm and 2nm.
At present, India is in the initial stage of the chip manufacturing race, but for the first time the attempt is not just to buy chips from abroad, but to set up the entire semiconductor industry in India. The coming years will tell whether this bet of Rs 1.27 lakh crore can turn India into a major chip hub of the world or not.
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