India has earmarked about 23 billion dollars to build a semiconductor industry.
The government hopes this will create skilled jobs and strengthen supply chains.
It also wants to give foreign technology companies another option beyond China.
Analytics Insight reported this, citing a Wall Street Journal report.
Key points
- India has approved about a dozen chip projects, according to the report.
- The biggest is an 11 billion dollar wafer plant in Gujarat, expected to start operations in 2028.
- Earlier chip projects in India failed, and business hurdles remain.
Why did earlier chip plans struggle?
India began building a public electronics sector in the 1950s. Its semiconductor ventures lost momentum after early progress.
Later private projects also failed to take shape. A chip project near Hyderabad was announced in 2006.
It was expected to include 500 million dollars from Advanced Micro Devices, but it never materialised.
Two fabrication plants announced in 2014 also did not move forward.
- 1950sIndia began building a public electronics sector. Its semiconductor ventures later lost momentum.
- 2006A chip project near Hyderabad was announced, with 500 million dollars expected from AMD. It never materialised.
- 2014Two fabrication plants were announced. Neither moved forward.
- 2027A facility in Assam expects commercial production, as part of today's assembly and testing projects.
Graphic: News Anek, from the facts in this report
In their 2023 book, When the Chips Are Down, Pranay Kotasthane and Abhiram Manchi linked these setbacks to business conditions.
They pointed to unstable policy, tax uncertainty, weak infrastructure and trade barriers.
What is being built now, and where?
The biggest project is a wafer fabrication plant in Gujarat. It is planned at 11 billion dollars.
Tata Electronics and Taiwan's Powerchip Semiconductor Manufacturing Corp. are developing it.
The plant plans to make 90-nanometer chips. These older-generation chips go into cars, phones and power equipment.
They are not the advanced processors at the centre of the US and China tech contest.
Other projects focus on assembly and testing. A facility in Assam expects commercial production in 2027.
Another plant in Gujarat has already started production. These operations need more labour than advanced chip making.
So can India build an industry that lasts?
Chris Miller, a Tufts University professor and author of Chip War, says electronics firms are looking for sites outside China.
He cited India's design talent, government support and large market as advantages.
India's mobile phone assembly in Tamil Nadu offers another starting point.
Miller said starting with less complex work could be a workable path.
Modi has made chips a priority. He has inaugurated all five editions of the Semicon India conference.
State governments have also offered their own incentives, but the big question remains.
Can these measures turn into a lasting industry?
Exam Corner
UPSC GS Paper 3 · Science and Tech: Semiconductor manufacturing
What's the news
India has earmarked about 23 billion dollars for semiconductors and approved about a dozen projects, according to a Wall Street Journal report cited by Analytics Insight.
Background
- Semiconductors are chips used in cars, phones and power equipment. Fabrication plants make them, while assembly and testing plants package them.
- Earlier attempts, including a 2006 Hyderabad project and two 2014 plans, did not take shape.
- A 2023 book linked these setbacks to unstable policy, tax uncertainty, weak infrastructure and trade barriers.
Facts for Prelims
- The Gujarat wafer fabrication plant is being developed by Tata Electronics and Taiwan's Powerchip Semiconductor Manufacturing Corp.
- The Gujarat plant plans to make 90-nanometer chips.
- Modi has inaugurated all five editions of the Semicon India conference.
Content for Mains
- Significance: Semiconductor plants can create skilled jobs and strengthen supply chains for electronics.
- Main issue: Past projects failed due to unstable policy, tax uncertainty and weak infrastructure.
- Challenges: Older-generation chips and labour-heavy assembly may not match advanced chip competition.
- Way forward: Design talent, market size and mobile assembly experience could help build a lasting base.
Practice question: Discuss the challenges India faces in building a sustainable semiconductor industry despite large public incentives and approved projects.
Prelims practice questions
Q1. Which companies are developing the 11 billion dollar wafer fabrication plant in Gujarat?
- Tata Electronics and Powerchip Semiconductor Manufacturing Corp.
- Advanced Micro Devices and Tufts University
- Tata Electronics and Samsung
- Powerchip and Analog Devices
Show answer
Answer: A. The article names Tata Electronics and Taiwan's Powerchip Semiconductor Manufacturing Corp. as the developers.
Q2. What chip size, in nanometers, does the Gujarat wafer fabrication plant plan to make?
- 5-nanometer
- 28-nanometer
- 90-nanometer
- 180-nanometer
Show answer
Answer: C. The article says the plant plans to make 90-nanometer chips, which are older-generation chips.
Key terms
- Semiconductor: A material used to make chips that control electronic devices.
- Wafer fabrication: Making chips on thin slices of silicon in a factory.
- Supply chain: The network of firms that make parts and move goods to final products.
More stories for exam preparation: UPSC Today
These points come from this news report. Check them with standard sources such as NCERT books and PIB before your exam.
