India's Drive for Semiconductor Independence: Building a Resilient Supply Chain
Arnob Roy, co-founder of Tejas Networks, underscores a critical need for a reliable supply of computer chips. For his Bangalore-based company, which provides essential equipment for mobile phone networks and broadband connections, this supply is paramount. Tejas Networks uniquely designs specialized telecom chips in India, requiring specific architectures for high reliability and fail-safe operation.
India's Design Prowess, Manufacturing Gap
India possesses significant expertise in computer chip design, boasting an estimated 20% of the world's semiconductor engineers. Major global chip companies have established substantial design centers within the country. However, India has historically lacked domestic semiconductor manufacturing capabilities. This gap has compelled Indian firms like Tejas Networks to outsource chip production overseas.
A National Imperative: Reducing Supply Chain Risk
The Covid-19 pandemic starkly illuminated the risks associated with concentrated global semiconductor manufacturing. This global event spurred India to embark on an ambitious initiative: developing its own robust semiconductor industry.
This initiative aims to reduce supply chain vulnerabilities and enhance resilience in electronics manufacturing.
Focusing on OSAT: A Strategic Entry Point
Semiconductor production is a multi-stage process, encompassing design, wafer fabrication, and Outsourced Semiconductor Assembly and Test (OSAT). While India excels in the design phase, its immediate focus for manufacturing development is OSAT.
This stage involves slicing wafers into individual chips, packaging them, connecting contacts, and conducting thorough testing. OSAT is considered a more accessible entry point for establishing manufacturing capabilities compared to the complex and capital-intensive full-scale wafer fabrication plants.
Kaynes Semicon: Pioneering Domestic Production
Marking a significant milestone, Kaynes Semicon, established in 2023, is the first company to operate a government-supported semiconductor plant in India. Located in Gujarat, this $260 million facility commenced assembling and testing computer chips in November 2023.
Raghu Panicker, CEO of Kaynes Semicon, elaborated on the intricacies of the process.
"Packaging is a complex 10-12 step manufacturing process, crucial for making wafers usable by industry."
Strategic Growth and Future Challenges
Initially, the Kaynes Semicon facility will produce chips for applications such as cars, telecommunications, and defense. The focus will not immediately be on the most advanced AI or smartphone chips. Panicker highlighted India's strategic approach: to build its industry by serving its own market first, prioritizing scale before complexity.
Kaynes Semicon has faced several challenges, including constructing sophisticated cleanrooms, installing specialized equipment, and undertaking extensive staff training. The cultural shift towards semiconductor manufacturing discipline, Panicker noted, has been as significant as the technical hurdles.