PPP in Semiconductor manufacturing

Why in the News?

Six working groups’ report on framing Indian government’s artificial intelligence (AI) roadmap have recommendations for public-private partnerships to make semiconductors for AI applications.

PPP in Semiconductor manufacturing:

1. The PPP model would be leveraged to build so-called “GPU clusters”.
2. Such GPU clusters shall act as masses of resource-intensive graphics processors used by AI applications, which will be made available to Indian start-ups and researchers.
3. The report recommends:
   1. Fiscal interventions to facilitate local manufacturing of robotics hardware
   2. Building of ‘demonstration facilities’ to test and show off technologies.
   3. Building capacity in the robotics sector

About:

Potential of Indian Semiconductor Industry:

1. The Electronic Manufacturing sector has grown from $30 billion to over $100 billion.
2. India has more than 200 mobile manufacturing units.
3. Domestic semiconductor consumption is expected to reach $80 billion by 2026.

Facilitating factors for the growth of the industry:

Efforts taken to enable the growth of the industry:

1. India’s Semiconductor Mission:
   1. Under the Ministry of Electronics and Information Technology.
   2. To make India as a global hub for electronics, chip manufacturing and design.
   3. Launched as part of ‘Make in India’ Initiative.
   4. The mission proposes a $10 billion incentive plan with a fiscal outlay of up to 50% of a project’s cost to display and semiconductor fabricators.
   5. Four Schemes under the Mission
      1. Semiconductor Fab Scheme – A fiscal support of up to % of project cost on projects appraised by the Expenditure Finance Committee.
      2. Display Fab Scheme - A fiscal support of up to % of project cost on projects appraised by the Expenditure Finance Committee.
      3. Semiconductor and Semiconductor ATMP - fiscal support of 50% of capital expenditure to Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs and Semiconductor Packaging (ATMP / OSAT) units.
      4. Design Linked Incentive Scheme - offer financial incentives and design infrastructure support across various stages of development and deployment of semiconductor design(s) for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design(s) over a period of 5 years.

Challenges faced by the sector:

• Shortage of water and energy requirements.

• With ever increasing population and increased strain on water resources, access to water by semi-conductor industries will be a challenging one.
• Power outages and coal shortages remains a concern until they are offset by adoption of renewable energy to expand the power grid as the sector requires electric supply available 24X7, uninterrupted, 365 days a year, except for the scheduled maintenance.

2. Need for Critical materials as raw materials for the semiconductor industry, as India either needs to import them or invest in domestic mining.
   1. India meets its current raw material requirements imports from China constituting 40%. 
   2. Domestic mining shall take considerable time and financial investments.
   3. Requirement of vast stretches of land protected from natural disasters such as Earthquakes.
   4. Shortage of Skilled workforce apart from design engineers who are trained in Device physics and process technology required for fabricating and manufacturing chips.
   5. Building a robust ecosystem because fabs require a variety of high-purity gases and wafers to fabricate the chips.
   6. Other Potential competitors for India:
      1. China – has considerable resources and political will
      2. Taiwan – It holds a virtual monopoly in the global chip manufacturing industry responsible for 60% of the global production.
      3. Vietnam, USA and South Korea are also potential competitors.

Concerted efforts with right policy implementation and resource facilitation shall enable India to emerge as a global hub for semiconductors manufacturing industry.