The Union Cabinet approved proposals to set up three semiconductor plants at a cumulative investment of Rs 1.26 lakh crore.

The government is offering incentives of up to Rs 76,000 crore to boost domestic manufacturing of semiconductors.

The three units approved for support under the scheme will make chips for various sectors, including defence, automobiles and telecommunications, and will begin construction within the next 100 days.

Importance of semiconductors

• Semiconductor is a foundational industry touching almost every aspect of life, powering everything from fridges to ACs and cars, aircraft to trains.

• Semiconductor chips are the essential building blocks of digital and digitised products. From smartphones and cars, through critical applications and infrastructures for healthcare, energy, communications and industrial automation, chips are central to the modern digital economy. 

• Recent global semiconductors shortages forced factory closures in a wide range of sectors from cars to health care devices. In the car sector, for example, production in some European countries decreased by one-third in 2021. This made more evident the extreme global dependency of the semiconductor value chain on a very limited number of actors in a complex geopolitical context.

• By 2030, the global semiconductor industry is expected to grow to $1 trillion.

• The Indian semiconductor market, worth $15 billion in 2020, is estimated to reach $63 billion by 2026.

• India currently imports most of its semiconductors, but the government wants to change that through domestic manufacturing. 

Semicon India Programme with an outlay of Rs 76,000 crore

• The government is very focused on its important objective of building the overall semiconductor ecosystem and ensuring that it catalyses India’s rapidly expanding electronics manufacturing and innovation ecosystem. 

• In December 2021, a comprehensive programme for the development of semiconductors and display manufacturing ecosystem in India was approved by the government with an outlay of Rs 76,000 crore. 

• The Modified Programme for Semiconductors and Display Fab Ecosystem (also known as Semicon India Programme) includes various schemes to attract investments in the field of semiconductors and display manufacturing.

• Semicon India Programme was conceived following the success of Digital India Programme and Make in India Programme in electronics manufacturing sector. 

• The schemes have laid a strong foundation for the Semicon India Programme thereby making the country an internationally conducive and competitive destination for semiconductor and display manufacturing.

Three new units

• Tata Electronics Pvt Ltd will set up a semiconductor fab in partnership with Taiwan's Powerchip Semiconductor Manufacturing Corp at Dholera’s special industrial region in Gujarat. The plant will have the capacity to produce 50,000 wafers per month and involve an investment of Rs 91,000 crore. 

• These chips driven by advanced technology will cater to multiple sectors — power management chips for electric vehicles (EV), telecom, defence, automotive, consumer electronics, display, and power electronics.

• The government has also approved a proposal by Tatas to build a greenfield semiconductor assembly and test facility in Morigaon, Assam. The facility will be built with an investment outlay of Rs 27,000 crore and is expected to generate over 27,000 direct and indirect jobs in the region.

• Notably, this will be India's first semiconductor unit in the northeast region.

• Tata Semiconductor Assembly and Test (TSAT) will develop indigenous advanced semiconductor packaging technologies, including flip chip and ISIP (integrated system in package) technologies, with a capacity of 48 million chips per day. The target segments for these would be automotive, electric vehicles, consumer electronics, telecom, and mobile phones, among others.

• The third proposal was by CG Power, which in partnership with Renesas Electronics Corp and Stars Microelectronics of Thailand, will set up a unit in Sanand in Gujarat at an investment of Rs 7,600 crore.

• Renesas is a leading semiconductor company focussed on specialised chips. It operates 12 semiconductor facilities and is an important player in microcontrollers, analogue, power, and system-on-chip products.

• The plant will have a capacity for 15 million chips per day, and CG Power semiconductor unit will manufacture chips for consumer, industrial, automotive and power applications.

• The three proposals cumulatively entail investments worth over Rs 1.26 lakh crore. 

• In June 2023, the Cabinet had approved a proposal of Micron for setting up a semiconductor unit in Sanand, Gujarat. 

• In the near future, more semiconductor proposals are expected to come up.

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