Can India Be a Player in the Computer Chip Industry?
A reliable supply of computer chips is essential for Arnob Roy, co-founder of Tejas Networks, a Bangalore-based company specializing in equipment for mobile phone networks and broadband connections. “Essentially, we provide the electronics that carry traffic across telecom networks,” he explains. The telecom industry relies on specialized chips designed to manage massive volumes of data from hundreds of thousands of users simultaneously. “These networks cannot go down. Reliability, redundancy, and fail-safe operation are critical—the chip architecture has to support that.”
India’s Strength in Chip Design
Tejas Networks designs many of these essential chips domestically, tapping into India’s growing reputation for semiconductor expertise, with an estimated 20% of the world’s semiconductor engineers based in the country. “Almost every major global chip company has its largest or second-largest design center in India, working on cutting-edge products,” says Amitesh Kumar Sinha, Joint Secretary of India’s Ministry of Electronics and Information Technology.
However, India faces a significant gap in semiconductor manufacturing capabilities. While companies like Tejas Networks can design chips locally, they still rely on overseas manufacturers to produce them. This dependency became painfully evident during the COVID-19 pandemic, when global chip shortages disrupted countless industries. “The pandemic made it clear that semiconductor manufacturing is too concentrated globally, and that concentration carries serious risk,” Roy notes.
The Push for a Domestic Semiconductor Industry
The COVID-19 crisis prompted India to accelerate the development of its own semiconductor ecosystem. As Sinha points out, “Covid showed us how fragile global supply chains can be. If one part of the world shuts down, electronics manufacturing everywhere is disrupted. That’s why India is developing its own semiconductor industry to reduce risk and increase resilience.” The government is focused on identifying areas within semiconductor production where India can compete effectively.
Steps in Semiconductor Production
The lifecycle of semiconductor manufacturing involves multiple stages:
– Design: This is where India is already excelling.
– Wafer Fabrication: Involves etching circuits onto silicon wafers using highly sophisticated, expensive machines in large factories, known as semiconductor “fabs.” This stage is currently dominated by companies in Taiwan, with China rapidly advancing.
– Outsourced Semiconductor Assembly and Test (OSAT): The final stage, which involves slicing silicon wafers into individual chips, packaging them, connecting contacts, and testing. India is prioritizing this segment as it’s more accessible to establish.
“Assembly, test, and packaging are easier to initiate than fabs, and that is where India is moving first,” says Ashok Chandak, president of the India Electronics and Semiconductor Association (IESA). Several OSAT plants are set to “enter mass production” this year.
Kaynes Semicon: Leading the Charge
Founded in 2023, Kaynes Semicon has made headlines as the first company to launch a semiconductor plant with government support. The company invested $260 million (£270 million) in a facility located in Gujarat, focusing on assembling and testing computer chips. Production began in November of the previous year. “Packaging isn’t just putting a chip in a box; it’s a multifaceted manufacturing process,” explains Raghu Panicker, CEO of Kaynes Semicon. “Without this stage, the wafer is useless.”
While Kaynes Semicon’s facility won’t produce the most advanced chips used in the latest mobile devices or AI training, it will manufacture chips essential for industries like automotive, telecommunications, and defense. “These may not be glamorous chips, but they are economically and strategically vital for India. Building an industry begins by serving our own market; complexity can come later,” Panicker adds.
Overcoming Challenges in Semiconductor Manufacturing
Establishing Kaynes Semicon has presented a steep learning curve. “We had never built a semiconductor cleanroom in India before, nor installed this equipment or trained people for this task,” Panicker states. “Semiconductors require a level of discipline, documentation, and process control distinct from traditional manufacturing. This cultural shift is as crucial as the technical one.” Recruitment and training present significant challenges. “Training takes time; you can’t shortcut five years of experience into six months. That’s the biggest bottleneck,” he says.
The Future of India in the Semiconductor Industry
Back in Bangalore, Arnob Roy is optimistic about sourcing more technology locally. “Over the next decade, we expect a substantial semiconductor manufacturing base to emerge in India, which will directly benefit companies like ours,” he notes. While he acknowledges that Indian firms may eventually design and manufacture complete telecom chipsets, he also recognizes it will require time and investment. “Deep-tech products take longer to mature, and India is only now beginning to support that kind of investment.”
In conclusion, India’s potential as a player in the computer chip industry is promising yet requires strategic effort, investment, and time to build a robust ecosystem. The journey ahead is long, but with determination and focus on local manufacturing, India can pave the way for its semiconductor future.