India in mission mode to create vibrant semiconductor ecosystem

India has announced one of the best incentive structures for promoting the whole semiconductor ecosystem in the country. Despite a close to $3 trillion economy, the country is dependent on semiconductors from global companies for most products of national importance. The government is trying to bridge this critical gap through promoting design, manufacturing and R&D of semiconductors in India, which will put it in a strategic advantageous position in the global platform. In a conversation with the Bizz Buzz, veteran of semiconductor industry, president of VLSI Society of India and advisor to India Electronics & Semiconductor Association (IESA), Dr Satya Gupta said that the country has started working on a mission mode to create a vibrant semiconductor and electronics manufacturing ecosystem in coming years

If you look at the Indian electronics products, the market share will be somewhere around 5-7 per cent. Others are global brands. Categories like mobile phones, Wi-Fi routers, smart cameras, and many others are mostly global brands which we are using now. Whether these brands are manufactured in India or imported, these are from global companies. So, the decision that which chip will be used in these products will be taken by these brands. We have done very well in building a manufacturing base in India in the last 5-7 years. Now, we have to build an electronics products manufacturing infrastructure

Govt should earmark $500 mn of fund for creating state of the art chips. Things like passport chips can be produced in India. This will solve two purposes. The market for the industry where these chips are ultimately used will get created. It will create a roadmap to fill our fabs (manufacturing units of semiconductors are called fabs). So, we need the ownership for information security, defence security, and cyber security among others

How do you see the budget announcements and the recently announced incentive of Rs76,000 crore to boost semiconductor ecosystem in the country?

Recent announcement is the culmination of the consultative process of the last 12 months. It is one of the best efforts that has come out of all the consultative process. The best thing about it is that it covers all the different angles of the semiconductor industry- design, manufacturing, research. If you want to develop an ecosystem in the semiconductor industry then you have to give right weightage to all three pillars of the industry, which are product design, manufacturing and research & talent development. All these are covered very nicely. In terms of magnitude of incentives, it is the best in the world. In comparison to the US, Europe, South Korea or other nations, the magnitude and structure of the incentives are by far the best given by any country.

Where does India stand in terms of whole semiconductor ecosystem? What are the strategic reasons for having our own semiconductors?

You have to look at the semiconductor manufacturing from this aspect. If we don't have the semiconductor manufacturing (in the country), what will be the situation 10-15 years down the line? This is because every sector will be driven by semiconductors. It is not only the gadgets like tablets or others, but sectors like infrastructure, power, water supply, defence, telecom and others will be dependent on semiconductors. By not having them, the country will be put to a strategic disadvantage. I am not saying that we will manufacture everything we need. But if we don't have the semiconductors, we don't have the bargaining power with other nations. For example, India deals with other countries as equal in terms of space technology. It gives a platform for mutual strategic relationship with other countries. We have to do that in case of semiconductor manufacturing.

As far as semiconductor products are concerned, we are still a minor player globally. If India doesn't have its own products, it will put us in a strategic disadvantageous position in two ways. Any electronic product like tablet for education, telecom, Wi-Fi, fibre to the home, security camera- which are very high impact applications where our Indian chips (that may be manufactured anywhere); India needs product ownership. Especially, we need product ownership in those areas, where the volumes are very high. There are 10-15 areas where a huge volume is already getting consumed. We need to have a national programme where these 10 chips of national importance are run in a mission mode. These can't be done by the startups as these chips are already established which means no private equity or venture capital will fund these initiatives. But these are very critical for India. So, the government should earmark $500 million of fund for creating state of the art chips. Things like passport chips can be produced in India. This will solve two purposes. The market for the industry where these chips are ultimately used will get created. It will create a roadmap to fill our fabs (manufacturing units of semiconductors are called fabs). So, we need the ownership for information security, defence security, and cyber security among others.

Can a vibrant semiconductor ecosystem be created without a robust electronics manufacturing base in India? What are your thoughts on this matter?

If you look at the Indian electronics products, the market share will be somewhere around 5-7 per cent. Others are global brands. Categories like mobile phones, wi-fi routers, smart cameras, and many others are mostly global brands which we are using now. Whether these brands are manufactured in India or imported, these are from global companies. So, the decision that which chip will be used in these products will be taken by these brands. We have done very well in building a manufacturing base in India in the last 5-7 years. Now, we have to build an electronics products manufacturing infrastructure.

We have taken 10 products of high importance and are trying to create a manufacturing base for Indian products. For example, we are creating a tablet which will be helpful for education and health sectors. We are building Wi-Fi routers, which will help in providing Wi-Fi access to the rural areas of the country. We are building smart cameras with AI (artificial intelligence) and ML (machine learning) features which will help in security and surveillance. Similarly, we are building other products of national importance through Indian technology. If we can three-four Indian companies in each of these categories, and push up the market share of Indian products to 25 per cent from seven per cent now, this will create robust electronics manufacturing base for Indian products. So, both, electronics manufacturing and chip manufacturing, have to be done simultaneously. We need product ownership in India. If we manufacture for global brands, we don't have product ownership. Indian products will only give us the product ownership.

When can we expect that India will be self-reliant to some extent in the semiconductor space?

There are things that can be done in 2-3 years, and there are things, we can do in 5-10 years. Things like passport chips can be done in short-term as the decision of what chip will go into these passports will be completely taken up by the government. Chips for power electronics sector can be done in 3-5 years.