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Semiconductor Supply Chain's Blueprint Needs Redisgning: SEMI Chief We need a different approach – the new principle for the supply chain is – just in case. It's a work in progress, SEMI is working aggressively to redesign the blueprint of the supply chain based on the just-in-case philosophy, says Ajit Manocha, president and CEO of SEMI, in an exclusive interaction with Entrepreneur India

By Shrabona Ghosh

Opinions expressed by Entrepreneur contributors are their own.

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The future for India's semiconductor aspiration is bright, provided the government upholds its investment policies, maintains a conducive regulatory business environment and avoids unpredictability. The country can significantly add to global semiconductor value chains. Early 2020 witnessed a global chip shortage sparked due to the COVID-19 induced supply issues which continued for over three years, impacting multiple industries. By mid of 2023, the situation improved as manufacturers ramped up production and customers adjusted to the predictable chip supply. Fast forward, export restrictions on key semiconductor materials from China, such as Gallium and Germanium, have fueled further fears of a second chip shortage, "To begin with, the supply chain disruptions were never really fixed. The demand was down as the world was grappling with economic uncertainties. As the economy is picking up, the demand has started growing. There needs to be a redundant supply chain which will minimise the disruptions in case of uncertainties. We need a different approach – the new principle for the supply chain is – just in case. It's a work in progress, SEMI is working very aggressively to redesign the blueprint of the supply chain based on the just-in-case philosophy. Let's really be conscious about what can come down the pike and how we prevent any major shortages or lead time issues," said Ajit Manocha, president and CEO of SEMI, a microelectronics industry association, explaining how the global ecosystem should find a way to circumvent uncertainties.

The current scenario coincides with a time when India is taking a leap ahead in semiconductor manufacturing, design, assembly and testing with five approved projects in the pipeline. So, how well is India positioned in the global semiconductor value chain?

In the past few years the global manufacturing landscape has seen a Tectonic Shift with multinational corporations seeking to de-risk from China: In order to reduce dependence on the country for manufacturing their high-tech electronic products and components, many of these companies have embraced a 'China plus one' (C+1) strategy taking active measures to reduce risk by downsizing their presence in the country.

"When the shortage happened, India was not in a position to address any of it. Now, we have the approval for the plan. The production of semiconductors has not yet started and if we want to be globally recognized we need to start early. Typically it can take two to three years to begin production. The government's clear and compelling vision along with policies, such as 70-75 per cent subsidies, are in our favour," he said.

This industry has potential to be a $1 trillion revenue by 2030, currently standing at a $500 million mark and it's going to double in seven years. "As of today, 104 semiconductor firms have been announced globally and more than 80 fabs are under construction worldwide, with just one in India. To hit the trillion in revenue target by 2027-2030, we'll need about 50-60 more fabs and out of these, India should decide its share. It should go after a big chunk, maybe 10, 15 or 20 firms, whatever the appetite is. As India is a growing economy, capital intensiveness will not be an issue, we have capacities for big investments," he added.

Expanding its presence in semiconductor manufacturing would build on India's decades-long experience in semiconductor design: At present India houses around 20 per cent of the global chip design talent pool. Tata Electronics is building a mega semiconductor fabrication facility in Dholera, Gujarat in partnership with PSMC (Taiwan's pure-play foundry with capabilities across logic and memory technologies). The pact with PSMC provides access to a broad technology portfolio in leading edge and mature nodes including 28nm, 40nm, 55nm, 90nm and 110nm and also collaboration for high volume manufacturing.

Can the country move towards advanced nodes as well? "In order to move towards advanced nodes, we need some technology partners. Currently, we do not have enough technology partners and this should be looked into. If we find the right partner, then it's the right time to move towards advanced nodes. I don't think the capital intensiveness for advanced nodes would be a problem," he explained.

In January this year, speaking to the media on the sidelines of India Electronics and Semiconductor Association (IESA), S Krishnan, secretary, Ministry of Electronics and IT (MeitY) said that India has a design talent pool for semiconductors, it needs a talent pool for manufacturing and supply chain. To meet its needs, India has forged partnerships with universities to lay the foundation for talent development in semiconductor technology. While there are various government initiatives, public private partnership (PPP) projects and industry-led programmes to provide skill-based training for jobs in the electronics sector, the expected rise in the supply chain localisation will increase the demand for developing a talent pool with a highly skilled workforce. For instance, to support the semiconductor manufacturing units, there is a demand for 10,000-13,000 skilled semiconductor engineers which is to be met by 2027. Having realised this, the government is already considering revamping the Skill India Mission which aims to train the Indian workforce on future-ready skills.

Despite efforts in place, the current scenario indicates that we need a different approach towards talent. "Curriculum should be revised in such a way that they get industry perspective integrated into the basic education of the role of semiconductors. India has multiple initiatives across various states. We need to connect these initiatives in a coordinated fashion to avoid duplication and accelerate progress. One way to address talent is by forming ISA, India's semi-industrial academy. SEMI will be willing to coordinate multiple entities who are doing different things. In a coordinated way, minimising redundancies, going to a well thought-through roadmap, and getting the country on the roadmap will actually expedite the work," he said, sharing insights into the need for workforce development in India.

India needs to be aggressive on ecosystem establishment as without an ecosystem the country will not succeed. "India is ready for a new era of innovation," he concluded.

To give a perspective, TrendForce's latest findings reveal that as of 2023, Taiwan holds approximately 46 per cent of global semiconductor foundry capacity, followed by China (26 per cent), South Korea (12 per cent), the US (6 per cent), and Japan (2 per cent). However, due to government incentives and subsidies promoting local production in countries like China and the US, the semiconductor production capacities of Taiwan and South Korea are projected to decrease to 41 per cent and 10 per cent, respectively, by 2027. In terms of global value chain, India would be competing with these countries which already have an established ecosystem, although it's difficult to have an end to end value chain for any country, establishing an ecosystem is the key to success.

Shrabona Ghosh

Correspondent

A journalist with a cosmopolitan mindset. I lead a project called 'Corporate Innovations' wherein I cover corporates across verticals and try to tell stories on innovations. Apart from this, I write industry pieces on FMCGs, auto, aviation, 5G and defense. 
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