Reference News Network, September 26 report: According to the US Consumer News and Business Channel website on September 22, India is eager to become a major force in the global semiconductor industry, but this ambition faces numerous obstacles: on one hand, competition is extremely fierce; on the other hand, India started late in advanced chip manufacturing.

India is a major consumer of electronic products globally, but the country has not yet established a complete chip industry and plays only a negligible role in the global supply chain. The "Semiconductor Mission" plan of New Delhi aims to change this situation.

This is an ambitious plan to build a complete supply chain in India, from chip design, manufacturing to testing and packaging.

This month, India approved 10 semiconductor projects with a total investment of 1.6 trillion rupees (about 18.2 billion US dollars). These include two semiconductor manufacturing factories and several testing and packaging factories.

In addition, India has a large number of engineering and technical talents who currently work for major global chip design companies.

However, experts point out that the progress of the plan is currently uneven in all aspects, and both the scale of investment and the reserve of talent are difficult to support India's chip ambitions.

Stephen Ezell, vice president of global innovation policy at the U.S. Information Technology and Innovation Foundation, said: "India needs more than just a few wafer plants or assembly, testing, and packaging facilities. It needs a vibrant, deeply rooted, and long-term planned industrial ecosystem."

Ezell said that large semiconductor manufacturers consider 'up to 500 independent factors' before investing billions of dollars in building wafer plants, covering aspects such as talent, taxation, trade, technology policy, labor costs, labor laws, and customs policies. In these areas, India still has a lot of room for improvement.

This May, the Indian government added a new component to its chip plan: supporting the manufacturing of electronic components to address an important bottleneck in the industry.

Previously, India had almost no electronic component manufacturing companies, such as mobile phone camera manufacturers. The products of chip manufacturers had no market in the local area.

The new policy provides financial support to electronic component manufacturers, which is expected to build a supply and demand connection system, opening up the domestic market for chip manufacturers.

In 2022, India also adjusted its past semiconductor industry strategy. Previously, the country only provided generous incentives for factories producing chips with a process node of 28 nanometers or smaller. In the chip industry, the smaller the nanometer value of the process technology, the higher the performance of the chip and the better the energy efficiency. These advanced process chips can integrate more transistors in the same space and are widely used in cutting-edge technologies such as artificial intelligence and quantum computing.

However, this strategy did not play a significant role in nurturing the nascent semiconductor industry, so the Indian government adjusted the policy: all chip manufacturing factories and testing and packaging factories can receive a subsidy of 50% of the project cost.

Wafer companies in Taiwan and the UK, as well as semiconductor packaging companies in the United States and South Korea, have expressed willingness to participate in the construction of India's semiconductor industry.

Ezell said: "The Indian government has introduced a number of preferential policies aimed at attracting foreign semiconductor manufacturers." But he also emphasized that such investments are not sustainable.

Sujay Shetty, Managing Director of Semiconductor Business at PwC India, said: "The next three to four years are a critical period for India to achieve its semiconductor goals."

He believes that building operational wafer plants and overcoming technical and infrastructure barriers beyond the incentive mechanisms will be key milestones in the development of India's semiconductor industry.

Wafer plants have strict requirements for site selection, such as being away from areas prone to natural disasters and having convenient transportation. Some regions still face challenges in this regard.

Shetty said that India also needs special chemical suppliers that can provide ultra-pure standards required for advanced semiconductor manufacturing.

Aside from chip manufacturing plants, many medium-sized Indian enterprises have shown interest in building chip testing and packaging plants. Some Indian business groups are also entering this field because compared to wafer plants, testing and packaging businesses have higher profit margins and lower capital intensity.

Shetty pointed out: "Outsourcing semiconductor assembly and test operations is a major opportunity for India, but clearly defining market access conditions and demand channels is crucial for achieving sustained growth."

If successful in this area, India will enter the global chip industry, but currently, the country still has a long way to go to achieve indigenous R&D and manufacturing of the most advanced 2-nanometer semiconductor technology. (Translated by Wang Dongdong)

Original article: https://www.toutiao.com/article/7554322815256642084/

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