Semiconductors Part Of India’s Security Charter: Anshuman Tripathi, NSAB

The Indian Government’s USD 10 billion (Rs 76,000 crore) outlay to incentivise the building of a semiconductor ecosystem in the country is a big part of PM Modi’s ‘Make in India’ initiative. 

But the announcement for incentives was made in late 2021 and the first round of applications was accepted in February 2022. As we enter the summer of 2023, it is clear that challenges are holding off the government from handing out approvals for a semiconductor manufacturing facility. In fact, it is being reported that the government could be looking to reopen the application process for the USD 10 billion in incentives and assistance to set up chip manufacturing in India.

At IESA’s Spacetronics and Deftronics 2023 event, BW Businessworld’s Rohit Chintapali spoke with Anshuman Tripathi (Member, National Security Advisory Board (NSAB)) to understand the challenges that are preventing the Indian Government from granting approvals for semiconductor manufacturing and the correlation between chip production and national security. Excerpts: 

How are chip production and national security correlated?

Semiconductors is that critical technology that powers all non-human intelligence. It can be called Embedded Electronic Intelligence. Your cell phone, car, microwave, tv and every electronic device runs on semiconductors. And if another country controls your chip production, then your country is susceptible. Hence, semiconductors are a part of India’s national security charter.

Let me give you an example. China was competing with America but it was cut off from key technologies in recent years. Suddenly, the Chinese conglomerates making cell phones and networks fell. 

"Your cell phone, car, microwave, tv and every electronic device runs on semiconductors. And if another country controls your chip production, then your country is susceptible. Hence, semiconductors are a part of India’s national security charter."

But shouldn’t India excel at chip design first (given the talent at hand) rather than going for manufacturing semiconductors? 

In design, India is already seen as a superpower. Every major chip manufactured in the world has a touch of Indian design, whether it is through Intel, NXP, or AMD. This happens through Indian engineers working in foreign countries or at Indian offices. But till now, the heavy lifting in manufacturing semiconductors was done by Mohali Semi-Conductor Laboratory, which makes 180-nanometre chips. Considering the geopolitical situation, India is also proactively looking to heavily investing into semiconductor manufacturing. Ministry of Electronics has come up with a USD 10 billion package. Hence, for the past year or so, we are in the process of finding the right company to establish a chip manufacturing facility.  

Approvals for the semiconductor plant have not come through yet and it has been a while. Why the holdoff?

There are a few challenges. One, a fab is a multi-billion-dollar investment and it requires an ecosystem. The ecosystem is not established in our country and that’s a challenge. Two, we have had challenges attracting a lot of top players as there is competition with incentivising companies. US CHIPS Act is worth USD 52 billion, which is five times larger than what we have on offer. So, it is a competitive landscape. We have our own strengths and we are trying to capitalise on that. But it takes time.

"[..] the present government is the first to recognise the need of this technology for a truly Atmanirbhar Bharat. Steps are being taken to be more integrated in the international semiconductor supply chain. I am confident that these measures will show results in the near future."

So, the top players are keeping their options open and looking across the board?

Absolutely. They are looking for the best business opportunity to invest. Today, Taiwan is the leader in semiconductors and the father of their semiconductor ecosystem, Morris Chang, has gone on record to say that if Taiwanese chip companies were to open fabs in America, their business would simply be not viable.

How do you view the present government's efforts on semiconductors?

Semiconductor manufacturing is arguably the most complicated technology on the planet. Thus expecting quick results is unrealistic.

Though the Indian minds have been powering a large part of this industry abroad for decades, the present government is the first to recognise the need of this technology for a truly Atmanirbhar Bharat. Steps are being taken to be more integrated in the international semiconductor supply chain. I am confident that these measures will show results in the near future.

‘Manufacturing in India will take care of Indian consumption’, is the present narrative. But manufacturing without catering to international markets makes the endeavour unviable...

It is important that we have our own supply chain for electronics. Otherwise, there is always a chance of being cut off due to various reasons such as geopolitics, supply chain pressures and more. Indian consumption means manufacturing in India but for the world. As the Prime Minister says, “Make in India for the world”. That is what we are focused on.

What do you make of India’s position in space electronics and semiconductors?

India has a very mature setup in space electronics because the semiconductor complex for many years was focusing on the space sector. We do good space-level technologies in semiconductors. In fact, that is the only area where India has a substantially good presence. There are not many semiconductor manufacturers who can claim that their chip has gone to Mars or Moon. There are perhaps a handful of countries who have achieved it. 

"India has a very mature setup in space electronics .. There are not many semiconductor manufacturers who can claim that their chip has gone to Mars or Moon."

Also Read: Economic Scope Of Semiconductor Fabs In India Go Far Beyond Chip Production: IESA Chief