Semicon India—Fab so far!

India is eyeing a semiconductor market size of $64 billion by 2026—and is also gearing up well for the big dartboard of the global $600 billion pie by 2030. What will help us, and what can stop us, from being—All that, and a bag of chips?

Rajeev Khushu, Chairperson, IESA- India Electronics and Semiconductor Association (the premier industry organisation representing the Semiconductor and Electronics Systems Design and Manufacturing (ESDM) Industry in India) is beaming with confidence and excitement after the recent Semicon Conference inaugurated by Prime Minister Narendra Modi (and—as he underlines—seriously attended by some top government authorities as well as industry stalwarts). But a major chunk of his enthusiasm lies in the direction, and the pace, that the Indian industry has picked. There is a lot that we have achieved in terms of self-reliance. India is emerging strongly on the global map for top manufacturers. And there is a lot that we need to grab when it comes to the right model, design edge and sustainable indigenisation. He gives us a view of this fresh circuit in this interview. Let’s find out why he feels ‘the stars are aligning for India now’.

What’s your reckoning of the current traction of Make in India?

We are definitely on the right track. It started with smartphones and today we see most of the manufacturing happening in India. The Phased Manufacturing Programme (PMP) kicked it off well and the journey was strengthened with PLI (Production Linked Incentive) scheme. Now that we have got a stronghold there, we should look beyond this segment and explore areas like medical devices and electric vehicles. We are getting a lot of interest and action from the top global majors for building their products here—and this is not just for catering to domestic appetite but exports too. We are working on Semicon parks across India. We are asking the government to accelerate these parks to ensure that the design community stays here.

Most of the gases needed for Semicon are produced in India but they are consumed by pharma and other industries.  We can incentivise their use in this space.

What’s still missing or needs to be worked upon?

Most of the design does not happen in India. In the future, if some other country is able to give similar market access or incentives as we do, then it will be difficult for India to hold this position. Design Linked Incentive should be our priority focus area now.

Any challenges in terms of resources—like gases, raw material, chemicals, etc.?

We are witnessing both green-field and brown-field action now. Most of the gases needed for Semicon are produced in India but they are consumed by pharma and other industries. We can incentivize their use in this space.

As per your recent report, the overall global market size is estimated to be $180-200 billion and can reach over $ 550-600 billion by 2030. How ready is India to tap this explosive appetite?

It is a big opportunity for India to leverage this boom. The Indian semiconductor market is slated to touch $64 billion by 2026. Do note here that the locally sourced semiconductor market can grow from $1.7 billion in 2019 to $11 billion in 2026. A lot of fabs can be announced shortly. Our vision should be to start supplying to the global semiconductor ecosystem.

And what’s a good route to that—fabs or foundries? Also, should we stress indigenisation or foreign collaboration (and if so, would it be antithetical to the Make-in-India spirit)?

There is a current installed base of 127 fabs: many will be up for up-gradation over the years, with an additional 27 new fabs and OSATs announced. In December many specific incentives were announced by the government followed by positive announcements from global companies. India can look at emerging as the land of the future Qualcomms of the world. More so, as 20 percent of Semicon design talent is in India. That can help us to play a crucial role in the overall ecosystem.

A lot of local companies are designing and manufacturing, but we should explore collaborations to build our ecosystem in a strong and deep way. Building such strengths cannot happen in isolation and we cannot rely on home-grown companies. We need collaboration but it will not be opposite to the Make in India movement. Make in India encourages foreign players to design and manufacture in India. India should look at getting better in a holistic way. We should remember that it took a lot of time and experience for China to move from sweatshops to other parts of the value chain.

How much room remains to be covered in design, research, and high-value addition areas?

Design is India’s strength when we look at skill sets. We should tap it. We should think beyond just manufacturing to both design and manufacturing. Yes, a lot of work here is still low-value addition. Think of 12-14 percent except for products like energy meters where value addition is up to 60 percent. This is because we lack design control and the power to pick and lay down components as per our choice. Even on smartphones, we don’t have our own brands. The days of Onida and BPL sound nostalgic. But the industry is planning to change that with specific interventions. We need to catch up to this race.

Tell us something about IESA’s collaboration with SIA (Semiconductor Industry Association) from the USA.

All big CEOs of global companies are part of SIA. The scope of this collaboration is to help Indian start-ups and fabless firms get exposure to US and other markets. SIA can also send more delegations here to understand areas of collaboration and expansion of design centers.

The scope of this collaboration is to help Indian start-ups and fabless firms get exposure to US and other markets.

Are you sure we will crack these ambitious goals of indigenization and being a global name when it comes to semiconductors and hardware? Would it help that the pandemic has exposed many supply chain issues? How strong is India now that companies are looking beyond China to other global alternatives?

The whole world is looking at India as a possible destination for many components. Businesses have learned the hard way that it helps to reduce dependence on just one region. There is no better cost advantage, market access, and talent strengths than what India can offer. Unlike other countries, India is giving much more than ‘sops’. The fabs get a lot of hand-holding. We need to give a complete package—like 24/7 infrastructure, water, power support, etc. It would be a big relief for a company that is looking at uprooting its manufacturing base from another region. We should expect a couple of Semicon fabs and OSAT (Outsourced semiconductor assembly and test) set-ups in the next two to three years. We shall also see improvement in Semicon consumption and design of both international and Indian brands—happening here. We have seen a lot of government support, and, as iterated during the recent Semicon Conference, the strength is coming from the top—from the PM. I am sure the stars are aligned well for India. India should step up and shine in the global Semicon ecosystem.

Rajeev Khushu is Chairperson, IESA- India Electronics

By Pratima H

pratimah@cybermedia.co.in