All modern-era digital devices, as well as future innovations, rely on the semiconductor sector. These discrete, yet very sophisticated elements drive almost all upcoming technologies, including AI, cloud computing, quantum computing, enhanced wireless networks, blockchain applications, bitcoin mining, 5G, IoT, self-driving vehicles, drones, robots, gaming, and wearables.
Policymakers and industry experts are looking for innovative ways to avoid debilitating bottlenecks in the future supply chain of microprocessors. Many businesses are taking steps to untangle their sprawling supply chains and forging closer relationships with chip firms to secure supplies in the long term.
The government also recently announced the PLI and DLI schemes as major steps towards building a semiconductor ecosystem in the country. To develop a semiconductor chip, manufacturing companies must go through several different designing and manufacturing phases and procedures. Any glitch or lag can give competitors a leg up.
Roadblock for India
Multi billions of dollars are needed to set up a fab manufacturing unit. It is not only the huge initial investment that acts as a bottle neck but the tenure to even reach break-even makes it non attractive business proposition for many players. Only companies with deep pockets can enter this domain.
A single chip requires hundreds of litres of pure water, which may be difficult to come by in sufficient amounts in our topography. Apart from the constant water supply constraints, one of the most important components of semiconductor manufacturing is a consistent and stable electrical supply. Because the process is so delicate, even a brief outage or power spike might cause it to come to a standstill, which can take hours or days to recover from.
The making of a semiconductor chip involves some technological wizardry. The process starts with a common material, like sand, and finishes with advanced circuitry made up of many transistors, such as a microprocessor capable of executing hundreds of millions of instructions per second. To accomplish this, while constantly cutting the cost of a transistor or other basic electrical components, the semiconductor industry works on separate steps like silicon plant, water fabrication, test, and assembly for developing a perfect chip.
As India makes every effort to start manufacturing, here are some of the factors that can increase the pace:
(i) Infrastructure is critical to supply chain strategy, and it must incorporate capacity planning, logistics, and manufacturing outsourcing in addition to production and quality control. Proper supply chain, government support and funding are key factors required for manufacturing semiconductors. As supply chains are recovering, businesses will invest in digital infrastructure that enables easy communication and transaction in real-time.
(ii) Power semiconductors: The Power Management Integrated Circuits (PMICs) and System Basis Chips (SBCs) helps in developing designs for developing automotive, industrial, or consumer applications and extend battery life, and reduce power dissipation. The integrated and cost-effective controllers will address a full range of AC-DC power conversion applications and the linear voltage regulators maintain the output voltage as it supports a comprehensive range of voltages — including solutions for optimized power consumption and highly compact design requirement. Power semiconductors have a different structure than ordinary semiconductors, which allows them to withstand high voltages and big currents without damage. They are essential for the efficient and sustainable use of energy because they can transfer energy across vast distances with low losses.
(iii) Clean Energy India has been one of the fastest-growing solar PV markets in recent times and has flourished due to the participation of major energy industry players with support from the government, as well as the emergence of renewable-focused start-ups. Out of the 10 largest solar plants under construction in 2018, five were spread across different States in India, making the country a prime market for efficient PV inverters. With a large number of countries racing to build reliable and long-term sustainable alternatives to curb fossil fuel emissions, wind energy and solar PV installations have recorded unparalleled growth over the past decade. Power semiconductor manufacturers believe that Gallium Nitride (GaN) and Silicon Carbide (SiC) based devices hold the key to addressing a primary hurdle for expansion of renewable energy as it provides scalable power conversion and storage solutions.
(iv) Water: Semiconductor manufacturing consumes large quantities of water for a variety of purposes ranging from equipment cooling to wafer surface cleaning. Ultrapure water is required in these stages as it is used for surface cleaning, solvent processing, and chemical mechanical planarization. Large amounts of UPW are consumed in all fabs — according to the International Technology Roadmap for Semiconductors (ITRS) (2011), device fabs utilise seven liters/cm2 of UPW per wafer out. This means that a typical 200 mm wafer fab that processes 20,000 wafers per month can use up to 3,000 m3 of UPW per day. That is the equivalent of the daily water requirements of a community of 20,000 people. The conversion of raw water to water of ultrahigh purity is thus a significant and costly activity for all semiconductor fabs. Because of the high cost of production and the high-volume needs, there are constant and significant efforts within the industry to reduce the usage of UPW.
Given India's substantial expertise and experience, it may be better if the current focus is on financial assistance on other areas of the chip-making chain, such as design centres, testing facilities, packaging along with looking for areas that have enough space, water, and manpower thus maximising self-reliance. Many States are attempting to establish plants in their territory. For example, over 250 acres of land have been allocated for fabrication units in Bengaluru, Mysuru, and Dharwad.
Because the semiconductor value chain is interrelated and linked with several industries, governments must develop policies that address all the crucial characteristics in the long run. Government policies should also focus on assuring and securing access to foreign technology suppliers through trade and foreign policy to ensure a global level of collaboration.
The writer is Vice-President, and India Managing Director, NXP India