India’s First Semiconductor Fab to Begin Production in 2026

Context: The Union Cabinet approved incentives for Tata Group’s proposal to set up a semiconductor foundry with a cumulative investment of Rs 91,000 crore. Powerchip Semiconductor Manufacturing Corporation (PSMC) of Taiwan would be the technology partner for the fab unit. India’s first semiconductor fabrication unit (fab) is on track to begin production by 2026.

India’s First Semiconductor Fab to Begin Production in 2026

At the groundbreaking ceremony for Tata Electronics’ and CG Power’s chip plant on Wednesday, India’s Minister for Railways, Communication, Electronics and Information Technology, Ashwini Vaishnaw, announced significant developments in the country’s chip-making journey. Tata Electronics’ plant will join the production line by the end of 2026.

India’s first domestically produced chips won’t be long. Micron’s plant is expected to deliver its first chip by December 2024. With these advancements, Minister Vaishnaw expressed confidence that India will be positioned among the top five chip ecosystems globally by 2029.

India’s First Semiconductor Fab Approved by Cabinet

The Cabinet’s approval marks a significant step towards India’s goal of becoming self-sufficient in chip manufacturing. India’s First Semiconductor Fab will cater to the growing demand for chips in sectors like electric vehicles, telecom, and consumer electronics. The project is expected to create over 1 lakh jobs and reduce dependence on chip imports.

Project Details

• A joint venture between the Tata Group and Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC).
• Located in Dholera, Gujarat with an estimated investment of Rs 91,000 crore.
• Production capacity of 50,000 wafers per month.

Positive Implications

• Reduced Reliance on Imports: India currently imports a large portion of its chip requirements.
• Strengthening Tech Ecosystem: This project will stimulate the growth of the domestic semiconductor industry.
• Attracting Investments: The success of this venture could attract further investments in chip manufacturing.

About Semiconductors

• Semiconductors are materials that have electrical conductivity between that of a conductor (e.g., Copper) and an insulator (e.g., Rubber).
• Semiconductors are typically made from materials such as silicon, germanium, and gallium arsenide.

Applications of Semiconductors

• Consumer electronics: smartphones, computers, televisions, and gaming consoles.
• Automotive: engine management systems, anti-lock braking systems, and airbags.
• Industrial automation: industrial control systems, robotics, and other automation applications.
• Energy: solar cells, wind turbines, and other renewable energy technologies.
• Healthcare: medical imaging devices, pacemakers, and other medical devices.

Check here: Semiconductor Industry in India

Global Semiconductor Supply Chain Diversification

• Concentration of Production: A majority of the world’s semiconductors, over 60%, are produced in Taiwan, with Taiwan and South Korea together manufacturing all advanced sub-10 nanometer chips.
• Pandemic Impact: The COVID-19 pandemic caused significant disruptions in China’s semiconductor production, leading to a global chip shortage.
• Conflict-Induced Scarcity: The conflict between Russia and Ukraine has exacerbated shortages, as Ukraine is a vital supplier of neon gas essential for semiconductor manufacturing.
• Geopolitical Tensions: The EU and the US have restricted the sale of advanced semiconductor manufacturing equipment to China, prompting China to respond with export controls on key semiconductor materials like gallium and germanium.
• Risk Mitigation: In light of these challenges, numerous countries are seeking to decentralise their semiconductor supply chains to avoid future disruptions.

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Benefits of a Semiconductor Plant in India

• Economic Growth: The establishment of a semiconductor fabrication plant is poised to drive India’s economic expansion and technological progress.
• Self-reliance: A domestic fab will reduce import dependency and improve the country’s self-sufficiency in critical technology areas.
• Global Positioning: By joining the global semiconductor manufacturing chain, India will become an attractive destination for investments and international tech collaborations.
• Economic Impact: The initiative is expected to bolster India’s manufacturing competitiveness, shrink the trade deficit, and enhance the nation’s stature in the international tech arena.
• Ancillary Growth: The presence of a semiconductor plant will likely propel the development of related industries and encourage innovation-driven entrepreneurship.

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