21st June 2023 (6 Topics)
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Semiconductor fab: the unfinished agenda
Context
The government’s 2022 Semiconductor Mission is laudable. But there is still uncertainty about whether India will have a fabrication plant. In this context, it is important to understand why earlier attempts failed and examine alternate approaches.
Earlier attempts
- Special Incentive Package- The first serious attempt was made in 2007 in the form of a Special Incentive Package (SIP), but it yielded no response.
- Modi?ed SIP- The second attempt in the form of Modified SIP in 2012 fared better.
- Two consortia- Two consortia were approved by the Cabinet with an attractive set of incentives. But finally, both failed to mobilise resources.
Challenges in constructing semiconductor Fabrication
- Investment- Investment in a semiconductor fab is one of the riskiest. Billions of dollars need to be recovered before the technology becomes obsolete.
- Ecosystem development- Developing an ecosystem for chip manufacturing in a green-field location is a major challenge.
- Art of chip-making- Above all is the art of chip-making. Despite the best of equipment, poor quality and low yields can make fabs fail.
Lessons from China
- Acquiring existing fabs-Acquiring existing fabs has many advantages. They will enable India to build the fab ecosystem and train human resources.
- ATMP (Assembly, Testing, Marking and Packaging)-Another strategy could be setting up ATMPs.
- R&D in fab technologies-Much lower subsidies would be required, and the funds saved could be used for advanced R&D in fab technologies.
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