The Aakhya Weekly #70 | Building a semiconductor ecosystem
The Aakhya Weekly #70 | Building a semiconductor ecosystem
In Focus: Semicon Games IV: Shifting gears
By Sujaya Sanjay
Chips are the new oil—and India is drilling for it.
A lot has been happening on the semiconductor ecosystem front in India with the Government in mission mode to build the sector from the ground up. Various schemes are already in place to incentivise chip design and the production of IT hardware, and the Government is leveraging geopolitics to collaborate with friendly governments who are already active along the supply chain.
Securing cooperation
This week, the Union Cabinet approved a Memorandum of Cooperation (MoC) that was signed with Japan in July. The MoC envisages collaboration to increase supply chain resilience and is expected to raise India's profile as a trusted partner.
As we explained in Semicon Games II, there is no chip player on earth today that can boast total forwards-and-backwards integration in the chipmaking process, much less a new entrant like India. International cooperation is indispensable to ensure the smooth running of supply chains. Japan is the second Quad member after the United States to ink a pact with India on semiconductors.
Scouting talent
MeitY has also expressed its commitment to cultivate 85,000 jobs in semiconductors in the next two years. In July, PM Modi announced that semiconductor courses will soon be available in 300 colleges across the country, and that five years from now, India will have over 1 lakh chip design engineers.
Chipmaking facilities need skilled technicians to operate them, which requires a massive overhaul of the country’s engineering syllabus, pronto. Nurturing semiconductor talent is no trivial matter—a variety of skills and training is necessary, including advanced qualifications up to the doctorate level. Engineers from India are among the best chip designers in the world, but there aren’t many incentives in place to get them to stay. According to data by Moneycontrol, about 8,000 entry-level positions are available in India today.
A plan to overhaul the curriculum and introduce structured courses in this sector is good news. It will help engineers acquire the right skillset required for a career in this field. However, that alone will not be enough. Nurturing talent will have to be accompanied by a strong ecosystem and a lucrative job market in India for aspiring chipmakers—a tall order, but increasingly achievable. Multiple chipmakers have taken the plunge, investing in various segments ranging from design R&D and skilling solutions to assembly, testing, marking, and packaging (ATMP) facilities, and maybe even a fabrication plant. Foreign semiconductor companies are key to growth of the sector. Improving ease of doing business in this sector will be a crucial test for India’s potential, not just in the semiconductor supply chain, but also as an investment destination.
Modernising SCL
Speaking of fabrication plants, we haven’t forgotten the Semiconductor Laboratory (SCL) in Mohali. SCL currently produces 180-nanometre chips, which was enough for the mission to Mars, but is now eyeing an upgrade to a capacity of producing 28-nm chips and beyond. Currently, the most advanced chips are at 2-nm (or less). Last month, MeitY invited bids for modernisation of SCL, open to both domestic and foreign companies.
The mysteries behind the fire that destroyed SCL in 1989 continue to remain unresolved and have become the stuff of urban legend, but throughout the years, despite scant State support, SCL has managed to stay afloat. SCL’s legacy chips have played a big role in India’s space ambitions—much like how Fairchild’s chips provided support to NASA’s historic Apollo 11 mission. Reviving SCL is a sensible proposition, but would likely be a long, arduous and expensive process—calling for more realistic timelines and maybe even a readjustment of priorities.
India’s strong presence in chip design—particularly in the R&D segment—had played a pivotal role during the 2008 financial crisis to cushion the global semiconductor industry against the contracting demand. Even without state-of-the-art fabrication facilities, India was still a leader in cutting-edge chip design. While SCL undergoes refurbishment, design and R&D must be developed in parallel.
The AI Frontier
If chips are the new oil, then AI chips are premium unleaded.
The year 2023 has been a breakout year for generative AI—by now, several of us have already experimented with tools like ChatGPT and Midjourney (or have tried it at least once). While the implications for the workplace present a range of exciting opportunities (read our previous piece on this here), it also has enormous potential to streamline the process of administration and public service delivery—a fact that has not gone unnoticed by the Government of India.
This month, MeitY published the first edition of its Expert Group Report on India AI 2023. The Report is a compilation of the findings of seven Working Groups constituted to study the AI ecosystem and create strategies to bridge the gaps: (a) Centres of Excellence; (b) India Dataset Platform; (c) NDMO; (d) Future Design; (e) FutureSkills; (f) Future Labs Compute; and (g) Semicon IndiaAI Chipsets.
On chipsets particularly, the Report recognises the importance of AI chips and recommends that the Government support their development through a public-private partnership model. The unique nature of AI chips allows for blinding speed and enhanced efficiency for training and inference of AI algorithms, while also being cost-effective. AI chipsets will soon form the bedrock for developing innovative use cases for AI.
India is also on track to lead the discussion on AI regulation, having been voted to the presidency of the Global Partnership on AI.
Concluding remarks
India's efforts to establish a strong semiconductor ecosystem are commendable, but there is still a long way to go. With the government's focus on collaboration, talent development, modernization of facilities, and the recognition of AI chipsets' significance, India is laying the foundation for a thriving ecosystem. The country's expertise in chip design and R&D, along with its commitment to AI development and regulation, positions India to be a key player in the global semiconductor industry. As India continues to make progress in these areas, it is poised to contribute significantly to technological advancements and innovation in the years to come.
Top Stories of the Week
India launches first test flight ahead of sending crew into space
ISRO has marked the first step in its mission to send astronauts into space - it has conducted the inaugural test flight for the Gaganyaan mission. Despite weather-related issues and a brief anomaly, the ISRO TV-D1 rocket was launched on October 21st at 4:30 GMT from Sriharikota.
The Gaganyaan mission will demonstrate the technology preparedness of India’s spaceflight capability - by carrying a three-member crew to earth’s orbit at an altitude of 400 km for a three-day mission, safely landing in the Indian Ocean. Preceding the first crewed mission in 2024, ISRO has planned a series of test flights. The recent test flight, the first in the series, was dedicated to evaluating the safety measures in place for crew members to escape in the event of a rocket malfunction. Looking ahead, another test flight is scheduled for early next year, featuring the humanoid robot VyomMitra.
Once completed, this mission will make India the fourth country to launch a manned spaceflight mission - joining the ranks of the US, Russia, and China. While India has achieved success with the recent Chandrayan-3 and Aditya L1 missions, human spaceflight is more complex and costly (up to 15 times). The idea of a crewed space mission was endorsed by ISRO's Policy Planning Committee back in 2004 but it took nearly two decades to conduct the trials. The upcoming tests will be closely observed as ISRO assesses advanced safety mechanisms and Gaganyaan's performance on all parameters.
Launch of the National Cooperative for Exports Limited
National Cooperative for Exports Limited (NCEL), the national-level, multi-state cooperative society, was formally launched by the Minister of Cooperation Amit Shah. Registered under the Multi-State Co-operative Societies Act of 2002, NCEL will operate as an umbrella organization for cooperative sector exports.
The primary goal of NCEL is to unlock the untapped export potential of the cooperative sector by giving it access to international markets and offering manufacturers guidance in producing goods that adhere to global standards. NCEL will focus on agriculture and related sectors. It will provide support to farmers in procurement-storage-processing, embracing organic farming, and raising finance. Farmer’s produce will be purchased at the Minimum Support Price (MSP), and at least 50% of the export profits will be allocated to farmer members of the cooperative - this model intends to provide farmers with direct financial gains from their produce.
NCEL will assist in establishing vital parameters for brand and quality awareness, creating infrastructure and product standardization tailored to the needs of small-scale farmers, all at an affordable cost. Essentially, the organization will function as a crucial link between farmers and the global market for a variety of high-demand agricultural products.
Until now, about 1,500 entities have enrolled under this overarching body. It has secured orders worth Rs 7,000 crores, with an additional Rs 15,000 crores under negotiation. Working closely with the Ministries of Commerce and External Affairs, NCEL will nurture the cooperative ecosystem and improve the linkages for its members.