Chip Design

Raipur- India’s electronics market, one of the largest in the world in terms of consumption, has grown to USD 400 billion by 2020 from USD 69.6 billion in 2012, largely led by an up-surge in demand, growing at a projected compound annual growth rate of close to 25% over the period. The Covid-19 pandemic and subsequent global lockdowns forced the closure of crucial semi-conductor chip-making facilities in Japan, South Korea, China, and the US. This presents an opportunity for India to fill up these production gaps by setting up its own manufacturing facilities. As there is almost no existence of semiconductor manufacturing companies in India, this leads to a huge import value of around $24 billion. The figure is estimated to reach around $100 billion shortly. India could have a large role to play in the semiconductor industry as the world’s fifth-largest economy looks to boost its domestic chip sector.

Chip design Industry – Status In Raipur, India

• Vedanta and Foxconn, in a 60-40 joint venture, will be setting up India’s first semiconductor production plant, a display fab unit, and a semiconductor assembling and testing unit over 1000 acres in Ahmedabad, state of Gujarat. The plant will begin production in two years as Foxconn plays the role of technical partner while Vedanta provides financial backing. The investment is worth over INR 1.54 trillion (approx. US$20 billion) and semiconductor manufacturing will be carried out by the holding company, Volcan Investments Limited.
• International consortium ISMC (US$3 billion investment) and Singapore-based IGSS (investment worth INR 256 billion) will be setting up semiconductor plants in Karnataka and Tamil Nadu, respectively.
• The Indian government confirmed it has received proposals from five companies to establish electronic chip and display manufacturing plants with an investment of INR 1.53 trillion (approx. US$20.5 billion).
• The Ministry of Electronics and Information (MeitY) is seeking applications from 100 domestic companies, start-ups and MSMEs under its Design Linked Incentive (DLI) Scheme. The scheme has three components – Chip Design infrastructure support, Product Design Linked Incentive and Deployment Linked Incentive. C-DAC (Centre for Development of Advanced Computing), a scientific society operating under MeitY, will serve as the nodal agency for implementation of the DLI scheme. The DLI scheme aims to nurture at least 20 domestic companies involved in semiconductor design and facilitate them to achieve turnover of more than INR 15 billion in the next five years. A dedicated portal has been made available – www.chips-dli.gov.in – for inviting online applications from January 1, 2022 to December 31, 2024. The applicants can find the guidelines of the DLI Scheme on the portal and register themselves for availing support under the scheme.
• With Centre’s Incentive Push, Rajesh Exports Announces Rs 24,000 Crore Investment In Telangana To Build Display Fab
• US-based Celesta Capital keen to invest in Indian semiconductor startups
• Govt will soon launch new PLI scheme for IT hardware: Union minister
• Reliance, HCL eye entry via ISMC
• Samsung research unit, IISc join hands to boost India semiconductor R&D
• Foxconn, Vedanta plan tech tie-up with STM for India semiconductor manufacturing unit
• Samsung body ties up with Karnataka for AI, IoT skill development
• Tata Elxsi Ltd, ASM Technologies Ltd, Dixon Technologies (India) Ltd, SPEL Semiconductor Ltd, Moschip Technologies Ltd, Ruttonsha International Rectifier Ltd, HCL Technologies Ltd, and others are a few semiconductor stocks in India.
• In late 2021, US chipmaker giant Intel expressed its interest in setting up a new plant in India and is likely to apply for incentives under the new scheme under the Program for Development of Semiconductors and Display Manufacturing Ecosystem in India.
• India and Taiwan are currently negotiating a free trade deal, with Taiwan setting up a semiconductor manufacturing unit in India serving as a key component for expanding bilateral economic engagement. The Indian government has reportedly already proposed a number of sites for the facility. Taiwan’s leading semiconductor producers are the Taiwan Semiconductor Manufacturing Company (TSMC) and the United Microelectronics Corporation (UMC). TSMC manufactures around 50 percent of all semiconductors globally as per industry estimates.
• Business Standard reports that “Tata Group is in discussions with some major international companies, including those from Taiwan, for its foray into the semiconductor chip business.”
• The Japan-based electronics company, Panasonic Corporation, has plans to set up a new plant at Jhajjar in Haryana for the production of refrigerators targeting the Indian market. Panasonic also intend to set up an R&D center for appliances, consisting of two technical divisions, to strengthen its product development in India.
• Samsung India Electronics Ltd will set up its new corporate office in the Goregaon suburb of Mumbai; the company has signed a deal to lease 100,000 square feet of space at Oberoi Realty Ltd’s commercial property Commerz II.
• Growth stage investor Next Orbit Ventures has planned to invest US$100 million in a semiconductor fabrication project based in Gujarat.
• Californian product engineering company INVECAS has planned to invest between US$15-20 million for the setup of design centers in Bengaluru and Hyderabad over the next few years.
• German semiconductor firm Infineon Technologies has partnered with the non-profit National Skill Development Corporation (NSDC) to impart education and training regarding semiconductors to young talents for the purpose of developing India’s electronics manufacturing ecosystem.

With increasing demand and untapped business demographics Inda has emerged as a leading investment portfolio especially for semiconductor and Electronic Systems Development.

Volume and Scope

The electronics industry and semiconductor industry have distinctive traits volume and scop. The semiconductor industry focuses on design and manufacture of integrated circuits which are then used by electronic industry to develop commercial end products. In a sense, semiconductor industry provides processed high value raw-material to electronic industry which then caters the need of industries that manufacture Mobile phones, Industrial electronics, LED Lighting, Consumer electronics (TV and audio), PCBA, Electronic components, IT Hardware, Wearables and hearables, Telecom equipment, Strategic electronics, Auto electronics etc.

The semiconductor can be classified into 3 categories:

• Chip manufacturers: Own their fabrication (chipmaking) plants
• Fabless chip companies: Hire contract manufacturers to make the chips they design
• Chip-equipment makers: Supply the gear and materials used to produce semiconductor products.

Electronics Systems Development and Application (ESDA) products segments cover mainly mobile phones, Information Technology hardware (‘IT hardware’), consumer electronics, wearables and hearables, LED lighting, electronic components in electric vehicles etc. the focus is on developing Industrial as well as consumer products.

It is expected that semiconductor industry will grow at a Compound annual growth rate of 19.7% from 2022 FY to 2026 FY. Similarly, ESDA industry will grow at a Compound annual growth rate of 11.25% from 2022 FY to 2027 FY.

The investment and the time to reach the breakeven point in the sector can be used as a marker to identify the volume and scope of semiconductor and electronic system design industry.

Semiconductor industry involved huge investment and typical incubation time is around 5-10 years. ESDA industry requires substantially less investment with an incubation period of 2-5 years.

Over the years the semiconductor industry has evolved in to components that target specific IP or design for a specific clientele. Such units perform all the operations involved in semiconductor fabrication cycle starting from idea development, design and development and verification of analog and digital integrated circuits. The developed designs are marketed as design soft codes which are then used by Fabless chip companies or Foundries for manufacturing specific systems or end products. These design and development companies working for semiconductor industries are called Design House. They work on business-to-business model with relatively very limited investment in sales as their clients are relatively fixed.

Bottlenecks

Despite increasing demand, government initiative and market push there are several issues in the growth of semiconductor industry in India.

Amongst other issues talent crunch is one issue that needs massive public and private collaboration to develop a timely solution. In recent years all the apex educational regulatory bodies such as AICTE, Electronics Sector Skills Council of India (ESSCI), National Institute of Electronics & Information Technology (NIELIT) and Ministry of Electronics and Information Technology, MeitY, have initiated numerous Production Linked Incentive Scheme (PLI) to train special manpower in the area of VLSI Design and related software at following levels:

• PhD on different aspects of VLSI Design and Related Software (Type-I Manpower)
• M.E. / M.Tech in VLSI Design and Microelectronics (Type-II Manpower)
• M.E. / M.Tech level in areas of Electronics, Communications, Computer Science, Instrumentation etc. (Type-III Manpower)
• B.Tech /B.E. Level (Type-IV Manpower)

Reference

Semiconductor Industry in India

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