india is determined to kill this time
2024-09-24
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india wants to become a major chip power.
indian prime minister narendra modi has claimed that he is "going all out" to make india one of the world's top five semiconductor manufacturers within five years, sweeping away the shadow of continuous failures in the past few decades.
tata group will build india's first large-scale chip manufacturing plant in modi's hometown of gujarat, with an expected monthly production of 50,000 wafers by the end of 2026.
the indian government has introduced a "generous" subsidy plan. it seems that this time it is really determined to enter the chip manufacturing field and gain a foothold.
1
factory construction boom
this spring, three semiconductor manufacturing plants received approval from india's federal cabinet.
the first is a wafer fab in gujarat, jointly built by tata electronics and taiwan's powerchip, with an investment of us$11 billion.
the second is a semiconductor packaging and testing plant in assam, with an investment of us$3.26 billion. the production capacity of the facility will reach 48 million pieces per day, serving the automotive, electric vehicle, consumer electronics, telecommunications, mobile phone and other market segments.
the third is a packaging and testing equipment plant in gujarat, jointly built by japan's renesas electronics and thailand's star microelectronics, with an investment of us$900 million.
the indian government estimates that the three new factories will create 20,000 high-tech jobs and provide another 60,000 jobs.
in addition to three local manufacturers, india has also introduced us chip company micron.micron has pledged to invest $825 million to build a packaging and testing plant in india to test dram and nand products. including subsidies from the indian government, micron's indian project can get an investment of up to $2.75 billion.
these large investments are all thanks to the semicon india programme promoted by indian prime minister modi.
the program was officially launched in january 2022, and target areas include semiconductor wafer fabs (all nodes), display wafer fabs (lcd/amoled), atmp/osat (back-end packaging and testing), compound semiconductor wafer fabs, microelectromechanical systems (mems), sensors, and discrete devices.
in addition, there are more than 15 applications in the evaluation or approval process. according to the indian express, israeli chip maker tower semiconductor is about to invest $8 billion in india to build a manufacturing plant.
sources also revealed that the indian government has received nine bids to transform the mohali semiconductor laboratory (scl), including from tata group, tower semiconductor and texas instruments.
the indian government has made great efforts to develop the semiconductor manufacturing industry. in the short term, this is mainly due to the chip shortage during the covid-19 pandemic, which has made india, which has been troubled, determined to "do it itself"; in the long term, this is mainly due to the strengthening of geopolitical influences, and india has the opportunity to reap the "dividends" like the mobile phone manufacturing industry.
ashwini vaishno, india's minister of electronics and information technology, likes to use the iphone as an example. "ten years ago, electronics manufacturing in india was almost negligible. today, the electronics manufacturing industry is worth $110 billion... apple alone employs 100,000 people."
of course, as the world's most populous country and the world's fifth largest economy, india itself has considerable demand.currently, new trends such as smartphones, consumer appliances and self-driving cars are becoming increasingly popular, all of which require a large number of chips.
india's semiconductor consumption accounts for 5% of global demand, and its semiconductor market size is us$34.3 billion (2023). according to the tata group, its goal is to push india's semiconductor output value to us$110 billion by 2030, accounting for 10% of global demand.
if these goals are achieved steadily, the industry's compound annual growth rate will be about 20%, which is an attractive prospect.
2
subsidy incentives
chips are as important as oil.
if oil defined geopolitics over the past half century, then chips are now the king. what makes consumer countries nervous is that more than 60% of the world's chips are produced in taiwan, china.
in june 2023, indian prime minister modi visited the united states and signed a number of agreements, among which the joint development of semiconductor technology was the biggest highlight. us president biden and modi signed a memorandum of understanding on semiconductor supply chain and innovation partnership, aiming to coordinate the semiconductor incentive plans of the two countries.
american companies micron and applied materials subsequently announced investment plans in india.
india has also taken action everywhere and strengthened cooperation with various forces.during modi's visit to the united states, he also signed memorandums of understanding with ibm and purdue university. in addition, india also signed a memorandum of understanding on semiconductor supply chain cooperation with japan. under the framework of the trade and technology committee (ttc), india signed a memorandum of understanding on semiconductor supply chain cooperation with the european union.
from a national perspective, india's incentive plan can be said to be very generous - the central government matches 50%, the relevant state governments match 20% to 25%, and companies only need to pay the rest. the overall external incentive exceeds 70%.
in other words, the company can get the job done by paying 30% of the cost.
today's generosity reflects yesterday's scarcity. india has always been completely dependent on imports for its chips.
in the past, india did not produce chips. in the 1960s, fairchild semiconductor planned to set up a factory in india, but the progress was extremely unsuccessful, so it simply chose another country.
indian chips are relatively remarkable in terms of design and r&d.since 1985, almost all of the world's top 25 semiconductor design companies, including intel, texas instruments, nvidia and qualcomm, have set up design and r&d centers in india, with most of their personnel concentrated in bangalore, karnataka, southern india.
lam research india was established in 2000 by lam research corporation, a us-based manufacturer of equipment for thin film deposition, plasma etching, photoresist stripping and wafer cleaning processes.
the only chip manufacturer in india is continental device india limited (cdil), headquartered in delhi, which has been manufacturing semiconductors since 1964. the company has american investors and an installed capacity of more than 250 million units. the products are produced and sold by the company itself, with local consumption accounting for about 70%. the export data in the past few years was also impressive, accounting for 50%-60% of india's total chip exports.
since the 21st century, india has been hoping to build a wafer fab.later, it was gradually discovered that packaging and testing is also an indispensable part of semiconductor manufacturing, and the investment amount is not that large, and it "can become the cornerstone for india to establish a strategic foothold in the market."
a country like malaysia has established its position in the global semiconductor industry chain by relying on packaging and testing.
3
ai chips are getting ahead?
india's main advantage in developing semiconductor manufacturing is its abundant talent pool.
according to deloitte data, india has 20% of the world's chip design talent. according to the it&if report, india has more than 125,000 integrated circuit designers, accounting for 20% of the world's total. companies like intel, amd and qualcomm have their largest r&d centers in india, making full use of local engineering talent.
deloitte estimates that the global semiconductor workforce will need to add more than 1 million skilled workers by 2030, and india is well positioned to meet this demand with approximately 100,000 new workers per year.
once the industrial chain is established, there will still be a shortage of talent - as long as large-scale investment flows in, the entire industrial chain will require at least 2 million people. in response, the indian government has begun to train engineers through the "chip to startup" program.
india has also improved its global rankings in logistics, infrastructure and a stable power grid, prerequisites for semiconductor manufacturing.
however, india's disadvantages are also very obvious: the business environment is poor.
first, india is known for its software strength, but not its hardware capabilities. due to the lack of a complete production chain, the share of manufacturing in india's gdp has been stagnant. this also means that the upstream and downstream links required to produce semiconductors may be "short-handed" and not suitable for use.
secondly, the government's supporting policies need to be addressed urgently. building an industrial chain from scratch requires "fundamental and lasting reforms" and the overall coordination of tariffs, taxes, infrastructure and other conditions. the current incentive policies are still relatively "localized."
third, the incentive policy is not outstanding. india's semiconductor incentive policy is a drop in the bucket compared to the subsidies in the united states and the european union. the relevant policies in japan, south korea, vietnam, malaysia, and singapore all provide great benefits. moreover, many companies will not give up their original layout or business simply because of subsidies, because factors such as suppliers, partners, consumers, and logistics networks affect the entire system.
when there is a big reward, there will always be brave men.
in august, ola electric, one of india’s largest electric two-wheeler manufacturers, announced the manufacture of three ai chips. the first three chips are bodhi 1, ojas, and sarv 1—all named after concepts related to buddhism, ayurveda, etc.
bodhi 1 is designed for ai reasoning and fine-tuning, mainly used in large language models and visual models, and is said to meet the needs of trillion-parameter models. the company also claims that bodhi 1 will surpass the current state-of-the-art technology, consume less power, and the chip is better than nvidia gpu.
however, there is currently a lack of information on the specific performance parameters of these three chips, where they are manufactured, and which nvidia gpus they are compared with.
if india has any opportunities to develop semiconductor manufacturing, they are mainly opportunities provided by geopolitics.
in a turbulent world with fragmented supply chains, india finds itself at a crossroads: either it starts making hardware for real, or, as it has done before, forgo the opportunity.
