Indian semiconductor ecosystem: News, Updates & Discussions.

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Govt to study IISc’s Rs 2,500-crore semiconductor fab proposal

NEW DELHI| BENGALURU: The government is likely to begin a feasibilty study for a Rs 2,500-crore Galium Nitride semiconductor fab that has been proposed by scientists at the Indian Institute of Science ( IISc) and if approved, could help India revive its bets on building a local semiconductor industry.

India has two fabs — SITAR in Bengaluru and Semiconductor Laboratory in Chandigarh which builds silicon chips for strategic purposes like defence and space and not for commercial use. The country is a net importer of semiconductor chips for its $ 100 billion electronics industry with limited local capabilities. The Niti Aayogbacked proposal is to build a fabrication facility using Galium Nitride, a material that is commonly used in light emiting diodes or LEDs and an emerging technology, while skipping the already mature silicon-based fab technology. US and China dominate silicon chip technology. The IISc project includes not just building the chips, but also systems for applications in power electronics and radio frequency electronics used for cellphone towers in 5G applications and radars.

“They (IISc) have prepared a detailed project report. It needs a different kind of appraisal —financial and sustainability and profitability. Everything has to be considered because fab you know is a very big project,” a Ministry of Electronics and Information Technology (Meity) official told ET. “The discussions are on between us, Niti aayog and the IISc team,” said the Meity official without specifying a timeline for the project approval. While India is taking initial steps with GaN semiconductor fab, China early this month said it would invest $ 47 billion in an investment firm to improve its ability to design and manufacture semiconductor chips. China consumes nearly half of the world’s chips production and has over two dozen fabs being built by companies such as Intel, Samsung and GlobalFoundries. “There seems to be a huge barrier that semiconductor manufacturing cannot be done in India. I am pretty sure that perception existed before CeNSe (Centre for Nano Science and Engineering) came in. We showed that it can be done in India,” said Prof Srinivasan Raghavan, who leads the ten-member team from IISc for the project.


The team has gathered expertise from design of chips to building systems for applications. The two biggest applications are power electronics and RF electronics. In RF electronics, the two most common and visible applications, one would be military radar installations, wireless towers and cellphone towers for 5G. The ecosystem for GaN in terms of devices is there.

The IISc team has submitted two proposals: the first Rs 2,500 crore greenfield facility and managing it for five years. It includes design and roll out of a qualified product in 36 months. The second one is Rs 300 crore line in CeNSe facility and roll out of the first product in 24 months. “If we have to become leaders of this technology, the government has to fund it. That is the way they have done it in China, Taiwan and Korea. It has to be a government-funded and privately operated company,” he said. The government is yet to finalise the funding mechanism, said the Meity official.

Govt to study IISc’s Rs 2,500-crore semiconductor fab proposal - The Economic Times
 
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is this same news we are seeing years after years or some development had happened ?
 
Sathya said:
is this same news we are seeing years after years or some development had happened ?
Click to expand...
I have been hearing such news since my college days and nothing has happened even after 2 decades. May be we will directly jump to Quantum computing 😉.
 
Sathya said:
is this same news we are seeing years after years or some development had happened ?
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This is GaN tech which will become industry standard in near future. Now this is used on AESA radar.

What you are referring is Semiconductor Wafer Fabrication using silicon which india still have no commercial capabilities.
 
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Sops will knock 65-70% off chips fab setup costs for companies

According to the policy, companies will need to shell out only 30-35% of the total project cost to set up a semiconductor fab and display fab, as the central government will provide 50% subsidy while states have been allowed to offer incentives over and above what the central government has proposed.

By Dia Rekhi & Surabhi Agarwal
ET Telecom, December 27, 2021, 09:18 IST
1640672624990.png


Chennai/New Delhi: Industry executives and experts have given a thumbs-up to the government’s newly formulated semiconductor policy, the fine print of which was released last week. At the same time, they have also expressed some concerns, pertaining to the government taking a stake in lieu of subsidy and gradation of incentives for fabs of different sizes.

According to the policy, companies will need to shell out only 30-35% of the total project cost to set up a semiconductor fab and display fab, as the central government will provide 50% subsidy while states have been allowed to offer incentives over and above what the central government has proposed. Various states are already offering sops on capital expenditure, of between 10% and 15% along with a host of other incentives.

The Vedanta Group, which is looking to invest between $3 billion and $5 billion to set up a display fabrication unit in the country, said the fine print looks favourable.

“For the first time, the government has announced the incentive on a pari-passu (equal footing) basis,” said Akarsh Hebbar, managing director, AvanStrate Inc, which is part of the Vedanta Group. Pari Passu denotes that the government will start providing the subsidy right at the construction stage in a phased manner. This will be a huge advantage for companies since semiconductor plants are very expensive and take several years to be built and start production.

There are, however, some areas of concern.

The topmost pertains to the gradation that the government has provided in the policy. It has said that it would provide up to 50% fiscal support for fabs that are 28-nanometre (nm) or below, up to 40% for 45-nm fabs and 30% for 65-nm fabs.

“This is something strange, because economic viability across the board requires support,” said Ajay Jalan, founder and managing partner of Next Orbit Ventures.

“The only logic I can see is that they only want only 28-nm digital fabs and want to discourage 65-nm or 45-nm fabs. It will not be an ideal situation because, you know, the semiconductor ecosystem will not be complete without analogue or memory or digital,” Jalan said.

All three need to be supported and “the staggered support” is not what industry will appreciate, he added. Jalan’s firm has already submitted a proposal to the government worth $3 billion for an analogue fab of 65-nm.

“Another worry is that these incentives can be against equity to the government,” Jalan explained. “The whole purpose of the grant and subsidies will be lost if an equity stake is taken to the extent of 49% against the fiscal support. Then it is not support; it is like a joint venture with the government. Government taking 49% dilutes the whole purpose of the scheme,” he added.

The government has notified the Rs 76,000 crore ($10 billion) package and said that applications will open on January 1 and close within 45 days. The government will fund 50% of the capital expenditure for two chip fabs and two display fabs, it said.

“There is a 45-day window, so there is urgency,” said Arun Mampazhy, an expert on semiconductor fab technology. “There seems to be a reasonably good guideline in terms of who can apply. You either have to have experience in running a 65-nm or a 45-nm or a 28-nm or above fab or you should have a licence for 28-nm and a roadmap for advanced note,” he said. “…which means, hopefully, any random person cannot apply without really having either an agreement or a joint venture or a licence, at least from one of the reliable and respected fabs.”

The government subsidy is in line with sops offered by other nations, said Hebbar of AvanStrate.

“The application window of 45 days is more than enough. As soon as it was announced, a lot of Taiwanese and Korean companies mobilized their resources and are saying that they want to look at India seriously,” he added.

Industry experts said the comprehensive policy and the various sops under it are a step in the right direction and will provide impetus to the sector. The short window of 45 days for applications will also help in faster closure of the scheme.

“The freedom to state governments to pitch in is definitely good,” Mampazhy said. “Hopefully, the state governments will take it in a competitive spirit. In addition to that, the infrastructure support for Electronics Manufacturing Clusters (EMC) 2.0 scheme will also provide ways to get additional support and demand aggregation support.”

According to the government notification, the government will also provide additional infrastructure support through the EMC 2.0 scheme, demand aggregation, support for R&D, skill development and training along with state government aid, if any.

For compound fabs and ATMP facilities, 30% of the capital expenditure will be reimbursed and the tenure of the scheme will be three years starting January 1.

The government is expecting 15 to 20 companies to be supported in each category.

Experts also said that the government has done a good job in terms of prioritising and putting out details of which areas are of urgent focus. There is, however, a fair bit of confusion over the extent of government support.

“There is no upper ceiling; 30% of capex incentive is mentioned but how far can that capex go? It also says that this is open for three years and the government is expecting about 15 to 20 beneficiaries. So, the government is taking it as it comes, because it's still an evolving market,” Mampazhy said.

For the compounds in Silicon Photonics, Mampazhy said he was unsure about how far a Rs 100 crore investment - the minimum put out by the government - would go.

“How much upwards of that (Rs 100 crore), we'll have to wait and see, because even there, to put up a decent fab, you will need to put in a few billions, or at least little close to a billion depending on which one you're talking about,” he added. “There is speculation that various companies, both global companies as well as some domestic players, have expressed interest.”

Sops will knock 65-70% off chips fab setup costs for companies - ET Telecom
 
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Ashwin said:
In this case, government policies. As we have cheap labour and scale, market will take care of everything else.
Click to expand...
You are some what right but dont expect much from the private sector. Successive govts may be faulted for continuing the license raj but semi conductors which is closely linked with software industry may be problem of focusing on being too much cheap rather than creating any significant value.

So called big Indian software companies ( which are mostly into services) hardly have evinced any interest despite the market potential of semis. These are the companies which keep growing profits quarter after quarter but hardly invest in any R&D. Amazon, Microsoft, Google started as software companies but are now designing chips in house.

Indian govt is still begging around the world for building semi-conductor fab while intel announced $20 billion plant in ohio, TSMC has one plant in construction in arizona and working with japan for another. In another 2-3 months most of the companies would have completed capex plans but Indian govt still would have nothing to show. Problem is Indian govts have no plan or action nothing whatsoever and private players in market dont care, end result is quite obvious status quo for another decade or two.
 
jetray said:
You are some what right but dont expect much from the private sector. Successive govts may be faulted for continuing the license raj but semi conductors which is closely linked with software industry may be problem of focusing on being too much cheap rather than creating any significant value.

So called big Indian software companies ( which are mostly into services) hardly have evinced any interest despite the market potential of semis. These are the companies which keep growing profits quarter after quarter but hardly invest in any R&D. Amazon, Microsoft, Google started as software companies but are now designing chips in house.

Indian govt is still begging around the world for building semi-conductor fab while intel announced $20 billion plant in ohio, TSMC has one plant in construction in arizona and working with japan for another. In another 2-3 months most of the companies would have completed capex plans but Indian govt still would have nothing to show. Problem is Indian govts have no plan or action nothing whatsoever and private players in market dont care, end result is quite obvious status quo for another decade or two.
Click to expand...
You are just ranting out of context. The government did not liberalize policies before for the private sector to enter. All these Asian giants had semiconductor-specific policy initiatives with the private sector from the 70s and 80s. Which includes Thailand, Malaysia, and Singapore. Even though these countries were doing low-value addition parts of the supply chain they had the initiative. Our investment was on Indian SCL nothing else.

jetray said:
So called big Indian software companies ( which are mostly into services) hardly have evinced any interest despite the market potential of semis.
Click to expand...
This part is hilarious. Why should software companies do semiconductors? I mean come on.

Even for any corporate in the hardware industry. The semiconductor is a terrible horse to bet on. Govt backing and headstart from the 80's didn't help the above-mentioned nation. They still remain insignificant players will limited value addition. This is an ultra-competitive, dynamic, and money-losing industry with razor-thin margins. Only a handful of market leaders make money.
 
jetray said:
You are some what right but dont expect much from the private sector. Successive govts may be faulted for continuing the license raj but semi conductors which is closely linked with software industry may be problem of focusing on being too much cheap rather than creating any significant value.

So called big Indian software companies ( which are mostly into services) hardly have evinced any interest despite the market potential of semis. These are the companies which keep growing profits quarter after quarter but hardly invest in any R&D. Amazon, Microsoft, Google started as software companies but are now designing chips in house.

Indian govt is still begging around the world for building semi-conductor fab while intel announced $20 billion plant in ohio, TSMC has one plant in construction in arizona and working with japan for another. In another 2-3 months most of the companies would have completed capex plans but Indian govt still would have nothing to show. Problem is Indian govts have no plan or action nothing whatsoever and private players in market dont care, end result is quite obvious status quo for another decade or two.
Click to expand...

There are private companies that are deeply interested in setting up fabs. But they decided to hold off on it because the domestic market is still immature and the govt wasn't providing enough sops to set up.

Both HCL and HSMC+Jaypee have tried and failed. HCL found the market immature and Jaypee couldn't secure the funding needed to allow the govt to invest.

www.business-standard.com

Govt cancels permit granted to HSMC Tech for setting up semiconductor plant

The government has cancelled the letter of intent granted to a consortium led by HSMC Technologies India for setting up the country's first electronic chip manufacturing plant, Parliament was informed Wednesday. With this, the government is left with no proposal to set up any manufacturing plant...
www.business-standard.com www.business-standard.com
 
Ashwin said:
You are just ranting out of context. The government did not liberalize policies before for the private sector to enter. All these Asian giants had semiconductor-specific policy initiatives with the private sector from the 70s and 80s. Which includes Thailand, Malaysia, and Singapore. Even though these countries were doing low-value addition parts of the supply chain they had the initiative. Our investment was on Indian SCL nothing else.
Click to expand...
Until nearly 2000 there were assemblers in India some of them being wipro, HCL infosystem...etc. Post 2000 most of them exited the hardware business & went completely to software side. Along with STPI , SEZ scheme was launched in 1991 which gave complete freedom to companies to import equipment duty free & all the exports were tax free. As such post 1991 companies had all the freedom to whatever they want inside SEZ no excuses there.

Most of the fabs operating today were started post 1990, in fact TSMC was started in 1987 , fab around 1990. India was not far behind, infact SCL was working on 1000 nm while rest of them were a generation or two ahead at 200-300 nm. As usual we dint keep up with rest of the world.
Neither the govt nor the private industry took that forward but instead went for easy money called software services which by the way needed massive hardware imports from the very same countries.
Ashwin said:
This part is hilarious. Why should software companies do semiconductors? I mean come on.

Even for any corporate in the hardware industry. The semiconductor is a terrible horse to bet on. Govt backing and headstart from the 80's didn't help the above-mentioned nation. They still remain insignificant players will limited value addition. This is an ultra-competitive, dynamic, and money-losing industry with razor-thin margins. Only a handful of market leaders make money.
Click to expand...
I think you are still living in a world where you think semi conductor is cyclical commodity which can be bought off shelf whenever we need.
Semiconductors need huge investment, margins were razer thin as the demand was less earlier. But that was before when usage of semis was not widespread, they were mostly used in IT systems only.

Semi-conductor is the future oil, either invest in it or being dependent on them like we are dependent on oil from middle east. Semis is a critical part of the supply chain , any disruption will slow down the economy to a large extent.

For small companies it might not make sense but for large companies (eg apple) it makes a ton of difference . Obviously we have no such companies or any ambition to be top leader , it will be a waste of investment. But countries & companies like china who want to compete do invest. Just ask tesla why they are designing their own chips for the car?

It is a ultra competitive space yes thats right but so are the margins as well. Margins are less for the one who dont keep up with the technology like the Indian companies. Indians always have this excuse, low margins, ultra competitive, can be bought off the shelf., small market...etc but these are simple BS excuses. Hard truth is that India is incompetent, we can hardly compete with world.

By the way for ppl who claim low margins, here it is a comparison between infosys & TSMC operating margin. Yes thats for the past 10 years not one or two years.


operatingmargin.JPG



At the end of the day capability matters , can India save its economy by producing chips inside or will we remain dependent on others ?
 
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