30th August 2024 (9 Topics)

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Government Plans Phase 2 of Semiconductor Incentive Policy

Context

The Indian government is preparing for the second phase of its ambitious semiconductor manufacturing incentive policy, aiming to bolster the country's position in the global chip industry. The proposed plan could see an increase in funding from $10 billion to $15 billion, with adjustments to the subsidy structure to attract more semiconductor manufacturing plants.

Current Status of the Scheme

In the initial phase of the semiconductor policy, India committed nearly all of the $10 billion allocated. This included substantial subsidies to attract both chip fabrication and assembly plants. Notable developments include:
- Tata Electronics: Secured approval for an $11 billion fabrication plant in partnership with Taiwan’s Powerchip.
- Micron Technology: Received approval for a chip assembly plant in Gujarat.
- Murugappa Group’s CG Power: Partnered with Japan’s Renesas for another assembly plant.

Proposed Changes in Phase 2

Increased Outlay: To remain competitive amidst global efforts to attract semiconductor investments, the government plans to raise the incentive fund to $15 billion.
Focus Shift: The new scheme will likely emphasize support for chip fabrication and advanced technologies rather than assembly and testing plants. The government plans to reduce subsidies for assembly and testing plants (ATMP/OSAT) from the current 50% to:
- 30% for conventional packaging technologies.
- 40% for advanced packaging technologies.
Support for Raw Materials and Ecosystem: The government is considering offering capital support for essential raw materials, chemicals, gases, and other ecosystem components needed for chip manufacturing.
Exclusion of Technology Transfer Costs: The new policy may not cover technology transfer costs. Companies seeking to use partner technologies might need to cover these expenses independently.
Advanced Display Technologies: The policy may also include incentives for the fabrication of micro-LED displays and other advanced display technologies.

Fact Box:

Semiconductors (Chips)

Semiconductors, commonly referred to as chips, serve as the backbone of virtually all electronic devices, powering everything -- from smartphones and laptops to household appliances, and automobiles.
Much of chip manufacturing are concentrated in countries like Taiwan, Japan, Singapore, and China.
Semiconductors are crystalline or amorphous solids that have electrical conductivity opposite at temperatures to those of metal, higher electrical resistance than typical resistant materials, but still of much lower resistance than insulators.
There are two basic groups or classifications that can be used to define the different semiconductor types:
- Intrinsic material: An intrinsic type of semiconductor material made to be very pure chemically.
- Extrinsic material: Extrinsic types of semiconductor are those where a small amount of impurity has been added to the basic intrinsic material.

India Semiconductor Mission (ISM)

The India Semiconductor Mission (ISM) was launched in 2022 with the aim of establishing 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.

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GS Analyst: Daily Current Affairs

30th August 2024 (9 Topics)

Copy

Government Plans Phase 2 of Semiconductor Incentive Policy

Current Status of the Scheme

Proposed Changes in Phase 2

Fact Box:

Still Have Questions?

GS Analyst: Daily Current Affairs

Government Plans Phase 2 of Semiconductor Incentive Policy

Current Status of the Scheme

Proposed Changes in Phase 2

Fact Box:

Still Have Questions?

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