Why in news?

The union cabinet, chaired by PM Modi, has approved the proposal of Kaynes Semicon to set up a semiconductor unit in Gujarat with an investment of INR 3,300 Cr. This is the fifth semiconductor unit, and the fourth assembly unit, to receive Cabinet approval.

The proposal was approved under the India Semiconductor Mission (ISM).

What’s in today’s article?

• Semiconductor manufacturing in India
• Chip assembly plant in Gujarat

Semiconductor manufacturing in India

• Need for domestic manufacturing of semiconductors
  • Foundation stone of modern electronics industry
    • Semiconductors and displays are the foundation of modern electronics industry.
    • These are critical components that power electronics - from computers and smartphones to the brake sensors in cars.
  • To reduce import dependency
    • As India does not produce any semiconductors, the country’s demands are met with imports.
    • The demand for semiconductors in India will reportedly reach around USD 100 billion by 2025, up from the current demand of USD 24 billion.
  • To overcome the disruption in supply-chain
    • The absence of local manufacturing affected India the most during the lockdown imposed due to the Covid-19 pandemic.
  • Geopolitical significance
    • In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance.
    • These are key to the security of critical information infrastructure.
    • E.g., The Department of Telecommunications has in the past raised concerns over possible bugs in the telecom equipment sold by the Chinese company.
• Steps taken by the Govt to promote indigenous semiconductor industry
  • India Semiconductor Mission (ISM)
    • Launched in 2022, ISM aims to establish a robust semiconductor ecosystem within the country.
    • This initiative, housed under the Digital India Corporation, is tasked with catalysing semiconductor manufacturing, packaging, and design capabilities in India.
    • As an independent business division, the ISM possesses the necessary administrative and financial autonomy to drive the program’s efficient implementation.
    • Moreover, it boasts an advisory board comprising leading global experts in the semiconductor domain, ensuring strategic guidance and expertise.
  • SemiconIndia Programme
    • The Union Cabinet approved the Semicon India Programme in 2021 with a budget of INR 76,000 crore.
    • The program aims to create a sustainable semiconductor and display ecosystem in India.
    • It does so by offering attractive incentives to companies involved in various semiconductor-related sectors, including Silicon Semiconductor Fabs, Display Fabs, Compound Semiconductors, Sensors, and Semiconductor Packaging.

• Design Linked Incentive (DLI) Scheme 
  • Uder this, support is provided to 100 domestic companies of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), etc.
  • The Centre for Development of Advanced Computing (CDAC) is the nodal agency for implementing the DLI Scheme.
• Modified Scheme for Setting up of Semiconductor Fabs 
  • The Modified Scheme for Setting up of Semiconductor Fabs in India provides a 50% fiscal support of the project cost for the setting up of semiconductor fabs in India. 
  • This scheme is part of the Semicon India program.
• Fiscal Support
  • The Central Government has announced incentives for every part of supply chain including electronic components, sub-assemblies, and finished goods.
  • In total, Government has committed support of Rs. 2,30,000 crore (USD 30 billion) to position India as global hub for electronics manufacturing with semiconductors as the foundational building block.
• Chips to Startup (C2S) programme
  • The government has also introduced the Chips to Startup (C2S) programme aims to train 85,000 engineers (Bachelors, Masters and Research level combined) qualified in ESDM disciplines over a period of 5 years.
    • ESDM – Electronic System Design and Manufacturing

Chip assembly plant in Gujarat

• About the news
  • In a significant move towards building a robust semiconductor ecosystem, the Union Cabinet approved the proposal for Kaynes Semicon Pvt Ltd to establish a semiconductor manufacturing unit in Sanand, Gujarat.
  • This initiative, which involves an investment of ₹3,300 crore, is expected to enhance India's semiconductor production capabilities.
• Key highlights of the plant
  • The capacity of this unit will be 60 lakh chips per day.
  • The chips produced in this unit will cater to a wide variety of applications which include segments such as industrial, automotive, electric vehicles, consumer electronics, telecom, mobile phones, etc.
• India’s ambitions to become a major chip hub
  • India is striving to become a major semiconductor hub, similar to the United States, Taiwan, and South Korea, by attracting foreign companies to establish operations within the country.
  • Notably, India has approved an $11 billion fabrication plant by Tata Electronics in partnership with Taiwan’s Powerchip and three chip assembly plants by Tatas, US-based Micron Technology, and Murugappa Group’s CG Power with Japan’s Renesas.
  • Additional proposals include a ₹78,000-crore fabrication plant by Israel’s Tower Semiconductor and a ₹4,000-crore assembly plant by Zoho, highlighting the country's growing ambitions in the semiconductor industry.