India's microchip leap: The tough part lies ahead

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₹1.5 trillion providing the building blocks for the critical semiconductor value chain of design, fabrication, assembly, testing, marking and packaging. Key among these proposals is the partnership between Tata Electronics and Taiwan’s Powerchip Semiconductor Manufacturing Corporation for a ₹91,000-crore fabrication plant with a capacity of 50,000 wafer starts per month. This chip capacity will grant traction at last to India’s long-standing quest for self-sufficiency in semiconductors, or near freedom from reliance on overseas suppliers.

Just as the US, China and other countries are betting, local microchip-making can support and fuel our advancement as a technology superpower. It might, however, be advisable to temper the celebrations. It is not that the proposed investments are insignificant, given the post-pandemic breakdown in critical tech supply chains which threatened the survival of varied factories and utility platforms.

Yet, the four plants should not be viewed as the answer to all of India’s chip requirements. They are likely to meet only the lower end of our chip demand and the wait for high-end chips is likely to get a little longer: the new investments will manage to make chips of only 28 nanometres (nm), while sophisticated plants globally have moved on to 3nm. Also, it may be wrong to view these chip projects as likely catalysts for ending the private sector’s prolonged investment drought, or as a solution for the endemic unemployment crisis we face.