India and the Semiconductors’ Scenario

Abstract

These are exciting times. The world is in a scramble, trying to secure the ‘CHIP’ for itself. CHIP- that tiny wafer which controls all – from satellites to aircrafts, from weapons to telecommunications, from computers to entrainment to medical science right down to that tiny car which your toddler is playing with right now. It is hard to imagine anything that is independent of the CHIP.

This work attempts to find brief answers to the following posers?

• What is the ‘chip threat’ that is getting the world worried?
• What is ‘chip war’ being waged between the two arch rivals
• Where is India in the chip scenario?
• How the visit of PM Modi to US was a shot in the arm for India’s chip prowess.

Setting the Perspective

First thing first – the chip or a microchip is one small wafer-thin piece of semi-conductor material that accommodates a huge number of miniaturised transistors and other electronic components on it and is capable of carrying out a phenomenal number of computations and calculations at electronic speeds.^[1] A word on how huge and why phenomenal:-

• The microchips at the cutting edge today are no more the 5-8 nanometres (NM). Each NM is one billionth (1/1000000000) of a meter. How small is that? Very small – the thickness of a single sheet of paper is about one lakh nanometres! In Nov 2022, IBM announced a 2NM microchip that is slated for production in 2025. It will accommodate some 50 billion transistors on its tiny self. ^[2] That is type of ‘small’ and ‘huge’ when it comes to chips.
• In Mar 2022, the researchers from Germany and Austria had established that the maximum speed of signal transmission (speed) on a microchip is one petahertz (one million gigahertz).^[3] It was established through research in Oct 22 that by splitting data into a spectrum of colour packets, a single computer chip could transmit some 1.84 petabits in one second. A speed capable of downloading some 230 million photographs in one single second, or the speed that will transmit all of the internet’s traffic in one second!^[4] How ‘phenomenal’ stands answered.

The Twin Verticals of the Chip Journey

There are two distinct functions related to chips. One is design and the other is manufacture (the latter also includes downstream actions of testing, acceptance and packaging).

The design as the word suggests, is to do R&D and design a product and thereafter design upgrades and successor to the base product. In design domain, Intel Corporation is the world’s largest in terms of product output followed by other chip design giants like Nvidia, Qualcomm, Texas Instruments, Micron technology etc.^[5] (top 5 design companies by product range.)

The manufacture of designed chips is a complex eco-system of companies involved in multiple verticals that go into manufacturing. These include the ones that provide specialist tools used in design, or the ones that supply raw materials and chemicals, to the ones that house huge machines that turn out chips. Downstream, there are companies that provide quality control, packaging and shipping. The semiconductor manufacturing units are generally called FABs or foundries (fabrication of chips).

The Chip Threat

The chip threat can be defined under two dimensions; 1. Over dependence 2. Security. This is briefly enumerated:-

• The world today is over-dependent for the supply of manufactured semiconductor from one country - Taiwan.
• Taiwan accounts for nearly 65% of all semiconductor supplies (implying manufactured chips) in the world and a whopping 90% of the entire sophisticated minimal dimension chips (a few nanometre types). ^[6]
• On the other hand, while the American companies ‘design’ the world’s most sophisticated chips, the same is not true when it comes to manufacturing. The US manufacturing capability has fallen over the years (in the sense that it is getting increasingly getting outsourced, mainly to Taiwan). In 1990 US manufactured some 37% of world’s chips. This fell to just 13% by 2010.^[7]
• The major share of manufacturing in Taiwan belongs to Taiwan Semiconductor Manufacturing Corporation or TSMC. This company is not only the world’s largest dedicated independent semiconductor foundry (FAB), but also it is also the world’s most valuable company in its core domain.
• This dependence is becoming dangerous as Taiwan is hotting up for all the wrong reasons. The latest ‘fuel-to-the-fire’ action took place as recently as 30 Jun 2023 when the Biden administration approved a whopping $ 440 million arms aid to Taiwan. ($332 million for 30mm ammunition and $108 million for spares).^[8]
• What if Taiwan gets embroiled in US-China crossfire? Given the rising tensions on both sides such a scenario is no more a ‘flight of fancy.
• With TSMC at the centre, some of the possibilities doing the rounds are briefly stated:-
• What if China invades and is successful in taking control of Taiwan’s semiconductor industry intact? In that scenario, it can cripple the world and starve it of semiconductors and advanced chips dealing a blow to the flight of advanced technologies – supercomputers, space programmes, advanced weaponry, hypersonics etc.^[9]
• What if the TSMC and others get destroyed in a no-holds-barred conflict? Experts feel that China will lose more than US. Why? Here is the answer:-
• The most advanced chips are made using photo lithographic machines. These machines use light to etch integrated circuits into silicon wafers. The one on the cutting edge in this process is the machine using the Extreme Ultra Violet (EUV) light having a precise wavelength of 13.5 NM. The previous version of EUV was done by machines employing Deep Ultra Violet (DUV) light of wavelength (193 NM). EUV as compared to DUV allows the memory to store ‘more capacity within the same area’ (implying smaller and smaller chips). ^[10] A Dutch Company ASML is the linchpin in EUV technology with a market share of a whopping 62% in 2020^[11].
• China depends on TSMC for the EUV technology. Why so? Because it has been denied the EUV technology and machines due to sanctions by the US. In 2020, the Chinese biggest chipmaker SMIC was targeted by US sanctions. The sanctions blacklisted SMIC and restricted its access to certain critical technologies and machines required for making the top-end chips. ^[12]
• In Oct 22, Biden administration slapped a sweeping range of export controls that aimed to curtail Chinese ability to obtain some of the world’s most cutting edge microchips.
• There is also a loose talk in the open media of US bombing/ aiding to self-destruct TSMC in a dire situation of its falling in the Chinese hands intact.^[13]

The above narrative briefly brings out two aspects. One, the ‘threat’ to the world at large borne out of its ‘overdependence’ for cutting edge microchips on a single country, waiting to boil off and two, the ‘chip war’ being played out largely between the US and China in which the former is leaving no stone unturned to deny the cutting edge chip capability to the later. In this context, book titled “Chip War: The fight for the world’s most critical technology’ ^[14] by Chris Miller is an apt reminder as to how this war has been joined and being fought ‘all engines firing’.

The Security Aspect of the Threat

The second dimension of the chip threat is security. By that it is implied the efforts by the chip-faring countries world over, trying to secure their base for supply of microchips if Taiwan route becomes dysfunctional for any reason. Some salient points are stated in this context:-

• In a bid to take the dependence vulnerability out of Taiwan, US has been able to get the TSMC establish a factory in Arizona with a capability of 20000, (5NM) microchips/month. The factory will start production in 2024. TSMC plans to invest hugely into this facility (some 3.5 Bn) making it to one of the largest foreign investments in US history.^[15]
• Towards rejuvenating the semiconductor base, US in Aug 2022 has signed into law the CHIPS Act 2022 providing for a USD 280 Bn spending that includes 52.7 Bn for domestic semiconductor manufacturing.^[16]
• As of Feb 2023, China has allocated some one trillion Yuan as Integrated Circuit Investment fund (also called the Big Fund) to infuse adequate resources in the chip industry.^[17]
• Several reports also state, the fait-accompli pause in the above investment owing to Covid costs and other reasons. As of date, China struggles to reach the cutting edge chip technology. As stated, some reasons for this are the crippling sanctions impacting availability of EUV lithography machines, raw materials and tools and the slow pace of design development in nanometre range. For instance, the Kirin 9000 series 5 NM chip being made by the Chinese giant Huawei is becoming extinct as the company is facing debilitating sanctions.^[18] The struggle continues basically in the catch up mode.
• Besides US, China and Taiwan, the other countries in the forefront of chip manufactureare briefly mentioned:-^[19]
• Japan – with a whopping 102 chip making facilities, Japan possesses one of the strongest semiconductor manufacturing base in the world.
• South Korea’s Samsung Electronics Corporation with its 70+ FABs is not only one of the largest chip producing company globally, but also, accounts for country’s largest export pie through chip export alone ( around 15%).^[20]
• Germany – 20 chipmaking facilities.
• Malaysia – 7 chipmaking plants (4-German, 1-Belgian, 2 – indigenous).
• Israel has 4 FABs – 2 of US and two indigenous. The efforts are on to bring all chipmaking under indigenous umbrella.
• Netherlands- home to the ASML of EUV fame, others FABs are NXP and Philips.
• UK- Company named Arm Ltd is high up in chip design. Several other fabrication facilities are owned by US and Dutch firms.

The above countries to a little lesser extent may be, but the others would surely be feeling the heat of the chip threat borne out of ‘overdependence’ and securing base for chip supply in case Taiwan boils over.

Where is India?

Surely not in the honour list of the chip-making giants; where are we? ‘Arriving’, that is the one word answer; though quite some distance to cover. Here is a brief capture of the India story.

It was way back in 2014, when the SHAKTI Processor Programme was started by Reconfigurable Intelligent System Engineering (RISE) Dept at IIT Madras, purely as an academic initiative. The programme aimed to build 6 variants of processors in collaboration with several industry players including ISRO. The research project reached the boot stage sometime in Nov 2018. The processor is a 180NM size with a speed in the range of 70-100 MHZ.

Following this, in Apr 2019 the news about another made-in-India microprocessor named AJIT appeared. It was conceptualised and designed by a team of nine researchers at IIT Bombay and fabricated by the India’s only FAB – Semiconductor Laboratory at Mohali, Chandigarh. This research project was also funded by MeitY.^[21] AJIT was in 180 NM size which eventually was to be scaled down to 65NM. It was a 32 bit processor with a speed of 70-120 MHZ. The same was designed to power India’s Regional Navigation Satellite System (IRNSS).^[22]

In the Indian public sector, the Semiconductor Laboratory (SCL) located at Mohali, Punjab is the public sector entity under the MeitY. SCL is responsible both for the R&D, as well as, FAB work in the field of Semiconductor technology. It was established in 1976. SCL started out with 800 NM (0.8 micrometre) chip size. Staring 2010, it went a step further to do 180 NM (0.18 micrometre) chips as manifested in the SHAKTI and AJIT series stated above.

It is the endeavour of the Govt to modernise the SCL. As of Feb 2023, the Govt has announced a $1.2 Bn package for doing R&D and creating prototypes of high order chips (implying smaller and faster chips) in India.^[23]

Alongside the above developments, but quite independently and on its own trajectory, the private sector semiconductor capability has also built a muscle in India. Actually during Covid when there was a huge surge in demand for PCs, laptops, smartphones, remote computing, auto data storage and transmission ( all thanks ‘work from home’ phenomenon), the semiconductor demand surged sending the industry in an overdrive to catch up. Several private sector players in semiconductor domain came up during this period. There has been no looking back.

As of date, the following top 10 companies are heralding the Indian chip era:-

• HCL technologies: Acquired Sankalp semiconductors in 2019.
• Vedanta Ltd: Entered into a JV with the Taiwanese chip making giant Foxconn in Sep 2022. This JV signed an agreement with the Gujarat Govt to invest Rs 1.54 lakh Cr for setting up the first semiconductor plant in Dholera Special Investment Region near Ahmedabad in Gujarat. As of Jul 2023 Foxconn was reported to exit from the JV as the duo could not find a technology partner^[24]. Notwithstanding this, Vedanta has announced that it has tied up with Japanese firms to bring quality chip in India by 2026.^[25]
• Tata Elxi ltd: Into IoT, cloud mobility, VR and AI.
• Dixon Technologies.
• Moschip technologies.
• ASM technologies.
• SPEL semiconductors limited.
• Ruttonsha International rectifiers ltd
• MIC electronics ltd.
• Surana telecom and Power ltd.
• NXP semiconductors.

India Semiconductor Mission

And now on to something that is making the waves in recent times. It is called the India Semiconductor Mission (ISM). As per Govt reports ISM is a specialised and independent Business Division that aims to build a vibrant semiconductor and display ecosystem in India with an aim to usher the country as a global hub for electronics manufacture and design.^[26]

ISM is anchored on four incentive based schemes aimed to take the semiconductor design and fabrication to the next level. A word about each is briefly stated:-^[27]

1. Semiconductor FAB Under this scheme ISM shall extend up to 50% of Project Cost to the approved applicants for setting up Semiconductor FABs in India. This incentive aims to attract investments in semiconductor wafer fabrication in India.
2. Display FABs This addresses the other vertical of associated niche technology that goes with semiconductors. It is display systems from hand-held devices to huge screens. Industry players wishing to set up Display FABs can similarly receive upto 50% of Project Cost under the terms specified (on pari-passu basis-implying on ‘equal footing’ for all contenders). No preferences/quotas/reservations/nominations etc.).
3. Compound Semiconductor Similar incentive will be available to industry players wanting to set up the following types of semiconductor FABs:-
• Compound Semiconductors. – Semiconductors made from two or more materials other than silicon which is most common. These could be germanium, selenium, arsenic etc.^[28]
• Silicon photonics- a material used for making photonic integrated circuits.^[29]
• Sensor (including MEMS) FAB - used for increasing the yield, accuracy and quality in microprocessors.^[30]
• Discrete semiconductor FAB- these semiconductors are mainly utilised in electronic devices to mainly control electric current.^[31]
• Semiconductor facilities related to OSAT/ATMP. OSAT stands for Outsourced Semiconductor Assembly and Test. ATMP stands for Advanced Packaging and Test Manufacturing. This subhead basically covers the provision of these facilities from India to Companies around the globe.^[32]
Design Linked Initiatives (DLI) DLI aims to provide financial incentives including infrastructure support across the entire spectrum of semiconductor designs for various usage types like integrated circuits, system on chips (SoC) etc.

SemiconIndia 2023

The big event of India Semiconductor Mission got over last month. It was named ‘SemiconIndia 2023’.The event was the 2nd edition of the Annual Global Summit organised by ISM. It was scheduled on 28 to 30 July 2023 in Gujarat under the leadership of PM Modi. The initiative was aimed to make India a global hub for semiconductor design manufacture and technology development.

The US Fact Sheet and its Impact

One of the many takeaways of PM Modi’s historic visit to the US in June 23 was a body of agreements that will prove to be instrumental in strengthening the country’s semiconductor prowess. The Fact Sheet issued under the joint statement mentions the following investments by US semiconductor firms:-

• Micron Technology will build a semiconductor assembly and test facility in India. Making use of the ISM’s initiative on Compound Semiconductor under the subhead ATMP, the company will receive 50% of the fiscal support for its project. The Micron’s investment will be up to $825 million. The facility is likely to become operational by late 2024. It will enable assembly, test and manufacture of both DRAM and NAND products. DRAM or Dynamic Random Access Memory is a type of semiconductor used by a data or programme code in a CPU while NAND category are the type of semiconductors used to retain large data sets. The total investment in the two categories including the Govt component will be 2.75Bn $.^[33]
• Applied Materials will build a collaborative Engineering Centre at Banguluru. This Centre will bring together multiple agencies like the leading global and domestic suppliers of semiconductors, top R&D institutions and the academia on one platform in one location. This will help accelerate the development of semiconductor industry across the spectrum.

  The Centre will also serve as a training establishment to hone future talent for the semiconductor industry. This will usher new opportunities for India’s emergenceas global player in the semiconductor eco system and will further strengthen our capabilities in semiconductor supply chain diversification. ^[34]

• Lam Research is a company that is forging ahead with new innovative products aimed at connecting the physical and virtual semiconductor ecosystem wherein, the labs (design) and FABs (manufacture) will be connected seamlessly thus unleashing the power of innovation for the global digital economy.

  Lam research has announced its plans to train some 60,000 Indian engineers in nanotechnologies. The training curriculum is designed for a 10 year period and will address the training needs of a niche workforce ready to drive the Indian semiconductor industry to the next level. This effort will close the talent gap between India and the world.^[35]

Some Endnotes

Some sign off points are stated:-

1. Semiconductor is the ‘thing’ that is at the heart of global digital existence.
2. The world is rightly worried about the ‘Chip-threat’ which relates to the overdependence for chip manufacture on one single source – Taiwan; given its vulnerabilities in the likely future scenario.
3. While the world at large is securing base and taking steps to counter the so called chip threat, a no-holds-barred chip war has been actively fought between the US and China.
4. India is surging ahead along multiple verticals to secure its rightful place in the global semiconductor world.
5. India Semiconductor Mission is a laudable initiate of the Govt. The same is likely serve as a driver in propelling India into the league of top global players in the semiconductor world.

Endnotes

^[1] “Integrated circuit”, at www.en.m.wikipedia.org.Accessed [3] on 02 Jul 2023.
^[2] “The smallest chip ever,” at www.times.com.Accessed [4] on 02 Jul 2023.
^[3] “One million gigahertz..” at www. nanowark.com. Accessed on 02 Jul 2023
^[4]Chip can transmit all of internet..”atwww.newscientist.com. Accessed on 02 Jul 2023.
^[5] “20 largest semiconductor industries in the world,” at www.finance.yahoo.com.Accessed [5] on 02 Jul 2023.
^[6] “Does the US need to reduce its dependence on Taiwan for semiconductors,” at www.supplychianbrain.com [6]. Accessed on 03 Jul 2023.
^[7] “Threatening to destroy TSMC ..” at www-cfr-org-cdn-ampproject.org. Accessed on 04 Jul 2023
^[8] “Biden administration approves potential $440 million arms sale to Taiwan,” at www.cnn.com.Accessed [7] on 04 Jul 2023.
^[9]TSMC fate will indeed be at stake if China attacks Taiwan,” at www.asia.nikkei.com [8]. Accessed on 04 Jul 2023
^[10] “EUV technology..” at www.semiconductors.samsung.com,” Accessed on 05 Jul 2023.
^[11] “How ASML became chipmakers biggest monopoly? At www.economist.com.Accessed [9] on 05 Jul 2023.
^[12] “China top chipmaker will struggle to make cutting edge chips competitively,” at www.cnbc.com.Accessed [10] on 05 Jul 2023.
^[13] “US threatens to blow up Taiwan’s semiconductor manufacturing firm,” at www.eurasiantimes.com [11]. Accessed on 05 Jul 2023.
^[14]Chip War: The fight for the world’s most critical technology”, at www.en.m.wikipedia.org.Accessed [3] on 05 Jul 2023.
^[15] “Tech giant plans big new investment..” at www.washingtonexaminer [12] .com. Accessed on 05 Jul 2023
^[16] “The CHIPS and Science Act : Here is what’s in it,”atwww.mckinsey.com. Accessed on 06 Jul 2023.
^[17] “Will China dominate the world of Semiconductors?” at wwweconomist.com.Accessed on 06 Jul 2023.
^[18]ibid
^[19] “Top 10 semiconductor manufacturing countries in the world,” at www.insidermonkey.com [13]. Accessed on 07 Jul 2023
^[20] “Semiconductor manufacturing by country 2023,” at www.worldpopulationreview.com.Accessed [14] on 06 Jul 2023.
^[21] “IIT Bombay develops AJIT..” at www.indianexpress.com [15]. Accessed on 07 Jul 2023.
^[22] “AJIT – first ever made-in-india microprocessor by IIT Bombay,” at www.electronics-lab.com.Accessed [16] on 07 Jul 2023.
^[23]Semiconductor laboratory Mohali,India,” at www.en.m.wikipedia.org.Accessed [3] on 13 Jul 2023.
^[24] “What happened to the US20Bn Vedanta Foxconn deal..?” at www.techwireasia.com [17]. Accessed on 13 Jul 2023.
^[25]Vedanta promises cheaper quality semiconductors..” at www.businesstoday.in [18]. Accessed on 13 Jul 2023
^[26]India semiconductor mission,” at www.ism.gov.in.Accessed [19] on 14 Jul 2023.
^[27] “India semiconductor mission,” at www.ism.gov.in.Accessed [19] on 21 Jul 2023.
^[28] “Compound semiconductors,” at www.global.sei.com.Accessed [20] on 21 Jul 2023.
^[29] “Silicon photonics,” at wwwsynopsys.com.Accessed on 21 Jul 2023.
^[30] “Sensors for semiconductor manufacturing,” at www.pcb.com [21]. Accessed on 21 Jul 2023
^[31] “Discrete semiconductors,” at www.fortunebusinessinsights.com [22]. Accessed on 21 Jul 2023
^[32] “Future of OSAT in India,” at www..linkedin.com [23]. Accessed on 21 Jul 2023.
^[33] “Factsheet: Republic of India Official State visit to the United States,” at www.whitehouse.gov.Accessed [24] on 24 Jul 2023.
^[34]ibid
^[35] “Lam research unveils plans to advance India’s semiconductor workforce..,” at www.newsroom.lamresearch.com [25]. Accessed on 24 Jul 2023.

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