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INDIA’S ‘CHIPLOMACY’

PM Modi stated that in India, chips represent more than just technology; they are a means to fulfill the aspirations of millions of citizens…reports Asian Lite News

Our dream is that every device in the world will have an Indian-made chip and 100 per cent of electronic manufacturing should happen in the country, Prime Minister Narendra Modi said on Wednesday.

Inaugurating the ‘Semicon India 2024’ at the India Expo Mart in Greater Noida, PM Modi said the meaning of chips in India is not just limited to technology but is a medium to fulfil the aspirations of crores of citizens.

Underlining that India is a huge consumer of such chips, he emphasised that the world’s finest digital public infrastructure (DPI) was built upon it.

“This small chip is doing big things to ensure last-mile delivery in India. Be it India’s UPI, Rupay Card, Digi Locker or Digi Yatra, multiple digital platforms have become a part of the everyday life of the people of India,” the Prime Minister noted.

Stressing that the country is set to play a big role in driving the global semiconductor industry, he highlighted that the government is offering 50 per cent financial support for setting up semiconductor manufacturing facilities, with state governments also playing a key role in this effort.

Because of these policies, he said, India has attracted investments worth more than Rs 1.5 lakh crore in a very short time and many more projects are in the pipeline.

PM Modi also revealed plans to establish a semiconductor research centre at the Indian Institute of Space Sciences, in collaboration with IITs, to produce not only high-tech chips for today but also next-generation chips.

The Prime Minister also urged those who question India’s focus on semiconductors to study the success of the Digital India Mission.

For the success of Digital India, the Prime Minister said that necessary reforms and infrastructure were initiated to make mobile handsets and data affordable in India.

With India’s electronics sector now valued at over $150 billion, the Prime Minister outlined a larger goal to grow the country’s electronics sector to $500 billion and create 6 million jobs by the end of this decade.

“Our goal is that 100 per cent of electronic manufacturing should happen in India. India will make semiconductor chips and the finished product too,” said the Prime Minister.

Whether it is mobile manufacturing, electronics, or semiconductors, “our focus is clear — we want to build a world that doesn’t stop or pause in times of crisis but keeps moving forward,” PM Modi emphasised.

CEOs Applaud Modi

Leading figures from the global semiconductor industry praised Prime Minister Narendra Modi’s leadership and vision for advancing India’s semiconductor sector during their addresses at SEMICON India 2024, held here at the India Expo Mart on Wednesday.

Among those who spoke were Ajit Manocha, President & CEO of SEMI; Randhir Thakur, CEO & MD of Tata Electronics; Kurt Sievers, President & CEO of NXP Semiconductors; Hidetoshi Shibata, CEO of Renesas Electronics; and Luc Van Den Hove, CEO of IMEC.

Ajit Manocha, President & CEO of SEMI, began his address by expressing admiration for the scale of the event.

“I would start with the word WOW… based on the size and scale of this event. This is unprecedented and exponential,” Manocha said.

He lauded PM Modi’s exceptional leadership, noting, “His leadership has inspired not just India but the entire world.” Manocha highlighted India’s rapid progress in the semiconductor sector, referencing PM Modi’s pivotal role in kickstarting the industry.

“We were walking earlier, now we are running… Opportunities are there,” he added.

Randhir Thakur, CEO & MD of Tata Electronics, thanked PM Modi for making the exhibition possible and noted India’s strides in establishing its first commercial fab in Gujarat and an Indigenous semiconductor plant in Assam.

“Both projects received approval from the Government of India in record time, setting a global benchmark,” he said, emphasising Tata’s collaboration with Taiwan’s Powerchip Semiconductor, which provides access to proprietary technology to address markets such as AI, automotive, and data storage.

Kurt Sievers, President & CEO of NXP Semiconductors, emphasised the importance of collaboration, ambition, and trust.

“This is a big milestone on the transformational journey of India,” Sievers said, noting that NXP has been in India for 50 years and praised the country’s combination of innovation, democracy, and trust, which attracts businesses like his to work in India.

Sievers reiterated NXP’s commitment, stating, “NXP is here to stay and committed to boosting the semiconductor ecosystem in India.”

Hidetoshi Shibata, CEO of Renesas Electronics, spoke about the company’s partnership with CG Power to establish one of India’s first semiconductor assembly facilities in Gujarat. Shibata added that Renesas is expanding its operations in India, including doubling its headcount in Bengaluru and Hyderabad by next year.

He shared insights into Renesas’ role in bringing sophisticated semiconductor technologies to the global market and praised India’s potential in the sector.

Luc Van Den Hove, CEO of IMEC, emphasised the importance of a long-term R&D strategy for semiconductor development, calling it a marathon rather than a sprint. He praised India’s commitment to semiconductor manufacturing and expressed IMEC’s readiness to form strategic partnerships with India.

“The world needs a reliable supply chain, and who can be a better-trusted partner than the world’s largest democracy,” Van Den Hove said, pledging IMEC’s support for India’s ambitious plans.

The event underscored India’s growing influence in the semiconductor industry, with global leaders acknowledging PM Modi’s leadership and the country’s potential to become a key player in the global semiconductor supply chain.

‘India in Sweet Spot’

With artificial intelligence (AI) fuelling global semiconductor demand, around 150 new fabrication units will be required to meet the industry’s ambitious $1 trillion target by 2030 and India will need to achieve exponential growth to maximise its share, industry leaders said on Wednesday.

Speaking at the ‘Semicon India 2024’ event here inaugurated by Prime Minister Narendra Modi in the presence of key industry stakeholders, Ajit Manocha, President and CEO, SEMI, said that the country is on the path to becoming the next semiconductor powerhouse in Asia, and the stars are now aligned to create an ecosystem that enables growth for India and the world.

“With AI fuelling global semiconductor demand, around 150 new fabs will be required to meet the industry’s ambitious $1 trillion target by 2030. India will need to achieve exponential growth to maximize its share, and SEMICON India will help to catalyse this market,” Manocha said.

Organized by SEMI in partnership with Messe Munchen India, MeitY, India Semiconductor Mission (ISM) and Digital India, the event underscores India’s emergence as a global semiconductor powerhouse.

As part of its ongoing efforts to accelerate India’s semiconductor growth, SEMI has officially launched its workforce development programme in India with a recent workshop on semiconductor manufacturing in partnership with ESSCI at IIT Delhi.

The programme emphasises collaboration with educational institutions to create specialized curricula for semiconductor design roles and co-develop skill development initiatives.

India is projected to face a workforce shortage of 250,000 to 300,000 professionals by 2027.

“Upskilling India’s raw talent to meet this demand is crucial, and global players have a vital role in this effort,” Manocha said.

Five semiconductor manufacturing facilities are coming up with a total investment of over Rs 1.52 lakh crore in India.

“With a very strong talent pipeline and strong resolve of the government to support the development of the semiconductor industry in India, I am sure we will be successful in becoming a trusted partner in the global value chain of semiconductors in the coming years,” said Akash Tripathi, CEO of the India Semiconductor Mission (ISM).

ALSO READ: India Eyes Leadership in Global Chip Market

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India News

Micron CEO praises India’s semiconductor power

Mehrotra emphasised the importance of semiconductors in daily life, noting their integral role in powering technologies that impact society…reports Asian Lite News

On the second day of the Vibrant Gujarat Global Summit, Sanjay Mehrotra, CEO of Micron Technology, underscored the pivotal role of semiconductors in India’s growth and the global economy.

Speaking at the event, Mehrotra highlighted the significance of Vibrant Gujarat as a forward-looking forum to discuss visionary ideas crucial for India’s semiconductor prowess and overall development.

“Vibrant Gujarat is an important forward-looking forum to discuss the visionary ideas critical for India, its growth, its semiconductor power. Never has the opportunity been greater, and I think we can feel it in the Vibrant Gujarat event,” remarked Sanjay Mehrotra, acknowledging the significance of the summit as a platform for discussions that shape the future.

Throughout the world, semiconductors have become central to almost every economic discussion, reflecting their critical role in various industries.

Mehrotra emphasised the importance of semiconductors in daily life, noting their integral role in powering technologies that impact society.

“The global semiconductor industry is poised to surpass 1 trillion dollars. The semiconductors we build at Micron, memory chips, handle the data that makes computing valuable,” explained Mehrotra.

His remarks shed light on the substantial economic value and impact of semiconductors, positioning them as a driving force behind technological advancements and innovation.

The CEO’s insights resonated with the growing global awareness of the strategic importance of semiconductors.

As countries strive to advance their technological capabilities, semiconductors play a crucial role in powering a wide range of applications, from computing and communication to healthcare and artificial intelligence.

Sanjay Mehrotra’s participation in the Vibrant Gujarat Global Summit not only underscores Micron Technology’s commitment to India but also reflects the broader recognition of the semiconductor industry’s pivotal role in shaping the future.

On Tuesday, Mehrotra had updated PM Modi on the progress of Micron’s project in Sanand, Gujarat, expressing gratitude for the state and central-level support. Acknowledging India’s potential in semiconductor manufacturing, Mehrotra outlined the critical role the country could play in this industry. Micron Technology, a key semiconductor manufacturer, had previously announced an investment of up to $825 million for a semiconductor assembly and test facility in India.

The summit continues to provide a platform for leaders, experts, and businesses to engage in discussions that contribute to India’s technological advancement and economic growth. (ANI)

ALSO READ-Chip giant Micron sets eyes on India

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-Top News USA

US semiconductor industry presses Biden to refrain from China curbs

The delegation also visited the latest indigenous destroyer INS Mormugao. Over the decades, cooperation between India and the UK has enhanced in various defence-related fields…reports Asian Lite News

Members of the Defence Select Committee of the United Kingdom House of Commons visited Mumbai to better understand the current situation in the Indo-Pacific and Indian Ocean Region and assess how the UK could contribute towards ensuring security in the region, the Navy said.

The delegation, led by Tobias Ellwood, MP, a former British Army Officer and currently the chairman of the committee, visited the city from July 19 to 21, the navy said in a statement.

The delegation interacted with Vice Admiral Sanjay Bhalla, Chief of Staff, Headquarters Western Naval Command and senior officers of the Command.

“The British delegation was in India to better understand the current situation in the Indo-Pacific and Indian Ocean Region (IOR) and assess how UK could contribute towards ensuring security in the region,” it said.

The interaction covered subjects of shared interests and the endeavours of both countries in bolstering security in the region. Ensuing discussions touched upon avenues to enhance defence cooperation between the two maritime nations, the navy said.

The delegation also visited the latest indigenous destroyer INS Mormugao. Over the decades, cooperation between India and the UK has enhanced in various defence-related fields.

The recent edition of Indian and Royal Navy bilateral exercise Konkan-23, held in March 2023, highlights continual efforts of both the countries to strengthen maritime security and uphold rules-based order in the region, the navy said.

The current visit by the Defence Select Committee furthers the growing cooperation between the two maritime nations for enhanced interoperability in various domains. With common interests in the IOR and mutual goal of peace and stability in the region, both countries are committed to work together, it added.

ALSO READ-The Chip war is on

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-Top News UK News

British semiconductor bosses threaten to move overseas

The Covid-19 pandemic exposed an over reliance on manufacturers from Taiwan and China for semiconductor components. That dependency has become fraught with tensions between China and Taiwan on the rise…reports Asian Lite News

The U.K.’s semiconductor industry is crying out for financial support from the government, with insiders warning the country risks losing its microchip firms to the U.S. and other countries if it doesn’t act soon.

Prime Minister Rishi Sunak’s government is yet to announce a strategy outlining U.K. efforts to support the chip industry. And semiconductor bosses in the country are growing frustrated.

Pragmatic Semiconductor, a Cambridge, England-based startup that produces nonsilicon chips, warned it may be forced to relocate overseas if the government doesn’t issue a plan for the industry soon.

“It has to make economic sense for companies like ours to continue to operate and manufacture here, and if there are greater potential economic benefits and governmental support packages abroad, then relocation is the only sensible business decision,” said Scott White, CEO of Pragmatic Semiconductor.

Britain is an understated player in the global chip market, specializing in design, intellectual property, research and fabrication of compound semiconductors.

It is also home to one of the most coveted semiconductor-related assets in the form of chip designer Arm. Based in Cambridge, Arm-licensed chips are used in roughly 95% of the world’s smartphones.

Semiconductors, and the mainly East Asia-based supply chain behind them, have become a thorny issue for world governments after a global shortage led to supply problems for major automakers and electronics manufacturers.

The Covid-19 pandemic exposed an overreliance on manufacturers from Taiwan and China for semiconductor components. That dependency has become fraught with tensions between China and Taiwan on the rise.

TSMC, the Taiwanese semiconductor giant, is by far the largest producer of microchips. Its chipmaking prowess is the envy of many developed Western nations, which are taking measures to boost domestic production of chips.

IQE, a microchip firm in the semiconductor “cluster” in Newport, Wales, has also warned it may be forced to relocate to the U.S. or EU if the government does not act in the next six months.

“We would love to stay in the UK and have committed to grow in the UK … but we also have to do what shareholders want and go where the money is,” Americo Lemos, IQE’s CEO, told The Times newspaper.

A government spokesperson said: “We are committed to supporting the UK’s vitally important semiconductor industry. Our strategy will grow the sector further and make sure we have a resilient supply chain. The strategy will be published as soon as possible.”

In the U.S., President Joe Biden signed into law the CHIPS and Science Act, a $280 billion package that includes $52 billion of funding to boost domestic semiconductor manufacturing.

The EU, meanwhile, has earmarked 43 billion euros ($45.9 billion) for Europe’s semiconductor industry with the aim of producing 20% of the world’s semiconductors by 2030.

China, too, has been forced to revamp its chip strategy after facing strict trade sanctions from the U.S. In December, the country was said to be preparing a more than 1 trillion yuan ($147 billion) package for its chip industry, according to Reuters.

U.K. tech industry executives have said the lack of a similar strategy from the government is hurting the country’s competitiveness.

The U.K. likely won’t have the kind of financial firepower to match those bold spending packages, they say. However, they’re hopeful the country will commit to investment in the several millions, tax incentives and an easier immigration process for high-skilled workers.

On Feb. 3, lawmakers on the Business, Energy and Industrial Strategy (BEIS) committee called for government action on the semiconductor industry, labeling the lack of a coherent microchip strategy an “act of national self harm.” The government’s BEIS agency was on Tuesday disbanded and replaced under a shuffle from Sunak.

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Business Tech Lite Technology

Global chip revenue growth worsens further

Currently, the semiconductor market is polarised between the consumer-driven markets and enterprise-driven markets…reports Asian Lite News

Global semiconductor revenue is projected to decline 3.6 per cent in 2023 — from the previous forecast of $623 billion to reach $596 billion, a new Gartner report showed on Monday.

In 2022, the market is on pace to grow 4 per cent and total $618 billion.

The worsening economic outlook is negatively impacting smartphone, PC and consumer electronics production which is positioning the DRAM market for oversupply for the remainder of 2022 and the first three quarters of 2023.

Gartner foresees DRAM revenue to decrease 2.6 per cent to reach $90.5 billion in 2022 and will further decline 18 per cent in 2023, to reach $74.2 billion.

“The short-term outlook for semiconductor revenue has worsened. Rapid deterioration in the global economy and weakening consumer demand will negatively impact the semiconductor market in 2023,: said Richard Gordon, Practice Vice President at Gartner.

Currently, the semiconductor market is polarised between the consumer-driven markets and enterprise-driven markets.

Weakness in the consumer-driven markets is being driven largely by the decline in disposable income caused by rising inflation and interest rates, including reprioritisation of consumer discretionary spending to other areas such as travel, leisure and entertainment, the report mentioned.

On the other hand, the enterprise-driven markets have been relatively resilient despite looming macro-economic slowdown and geopolitical concerns.

“The relative strength in the enterprise-driven markets comes from strategic investments by corporations that are looking to strengthen their infrastructure to continue supporting their work from home workforce, business expansion plans and ongoing digitalization strategies,” said Gordon.

For the remainder of 2022, the memory market is witnessing faltering demand, swollen inventories and customers pressing for considerably lower prices.

NAND revenue is projected to increase 4.4 per cent to $68.8 billion in 2022, but it is on pace to decline 13.7 per cent in 2023 to $59.4 billion, said the report.

ALSO READ: Entrepreneurship, a path to greater future

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Business India News

Indian semiconductor sector target $110 billion by 2030


IT Minister Ashwini Vaishnaw said the government has received many applications under the Semiconductor India Programme (PLI scheme) and expected the process to take about 15-18 months to complete…reports Asian Lite News

In this technologically connected world, semiconductors play a pivotal role. To give a boost to this particular sector, India recently hosted a big conference. Indian Prime Minister Narendra Modi said India’s own consumption of semiconductors is expected to cross $80 billion by 2026 and $110 billion by 2030.

“We are investing heavily in skilling and training young Indians for the needs of the 21st century. We have an exceptional semiconductor design talent pool which makes up to 20 per cent of the world’s semiconductor design engineers. Almost all of the top 25 semiconductor design companies have their design or R&D centres in our country,” he said at the Semicon India Conference.

“Our ‘Production Linked Incentives’ schemes offer incentives of over $26 billion in 14 key sectors. Over the next 5 years, the electronics manufacturing sector is expected to see record growth. We recently announced Semi-con India Programme with a total outlay of over $10 billion. This programme aims to provide financial support to companies investing in semiconductors, display manufacturing and design ecosystem. We are aware that in order for a semiconductor ecosystem to flourish, it is necessary to ensure adequate support from the Government. Allow me to put our approach in the language of semiconductors itself.”

“While the industry works hard, the government must work even harder. I would like to assure you that we will continue to support the industry in future as well. We have taken care to see that the Semi-con India programme addresses various parts of the ecosystem such as semiconductor fab, display fab, design, assembly, test, marking and packaging of semiconductors,” he added.

The purpose of the three-day Semicon India conference is to kickstart India’s ambition in becoming the global electronics and semiconductor design and manufacturing hub.

Minister of State for Electronics & Information Technology and Skill Development & Entrepreneurship Rajeev Chandrasekhar, in his concluding remarks, said: “These past 3 days have been supercharged, full of energy and brought many promises. Our mission is to bring Prime Minister Narendra Modi’s vision of making India a major player in global semiconductor supply chain. The technology ecosystem leading India into the next wave digital innovation will only be possible with all stakeholders coming together and working relentlessly so that soon we will be able to proudly announce ‘India Inside’ in every ubiquitous technology product.”

IT Minister Ashwini Vaishnaw said the government has received many applications under the Semiconductor India Programme (PLI scheme) and expected the process to take about 15-18 months to complete.

The minister, while addressing the Semicon India 2022 conference in Bengaluru, said by April or May next year, there will be good news for the nation.

“We understand that many countries are offering incentives. But what we offer, along with substantial incentives, is a commitment to create and augment our talent pool by 85,000 semiconductor professionals over the next ten years. These will be industry-ready professionals and we have already tied up with global institutions,” he said.

So far India has received investment proposals from five global Semicon majors to set up semiconductor fab and display fab locally in India. The proposals received so far are to the tune of $20.5 billion in the greenfield segment of display and semiconductor chip manufacturing.

Largest semiconductor display equipment manufacturer in the world, Applied Materials, announced to invest Rs 1,800 crore in India. The company has acquired a large land parcel in Bengaluru, to set up the proposed manufacturing facility.

“Today, semiconductors are an essential part of the DNA of new age gadgets spanning smartphones, laptops, and cars. The post-covid demand growth across sectors has created a sudden splurge in demand for semiconductors which is another supply chain constraint that automotive manufacturers need to prioritize and address,” said Vinay Raghunath, EY India Consulting AMI Leader in an earlier report.

Semiconductor manufacturing is a complex global intertwined ecosystem, which has led to a supply chain that is vulnerable to macroeconomics, geopolitics and natural disasters. Semiconductor companies operate in many different countries and jurisdictions, and each of them have country-specific as well as international laws relating to health and environment regulations.

As the manufacturing process is complex and the ecosystem of players so diverse, there is a flurry of business models with companies targeting scale through market leadership or specialization, the EY stated.

The semiconductor manufacturing process requires very unique, and sometimes scarce raw materials and chemical substances. Due to their unique and specialized character, these tend not to be widely available and can sometimes only be mined in conflict areas. Any disturbance in the supply of these materials has immediate effects on production.

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Business India News

Semiconductor revenue growth at 26% in 2021


The most significant shift among the semiconductor vendor ranking in 2021 was HiSilicon dropping out of the top 25…reports Asian Lite News

The worldwide semiconductor revenue totalled $595 billion in 2021, an increase of 26.3 per cent from 2020, a report said on Thursday.

According to market research firm Gartner, Samsung Electronics regained the top spot from Intel for the first time since 2018, though by less than a percentage point, with revenue increasing 28 per cent in 2021.

“The events behind the current chip shortage continue to impact original equipment manufacturers (OEMs) around the world, but the 5G smartphone ramps up and a combination of strong demand and logistics/raw material price increases drove semiconductor average selling prices (ASPs) higher, contributing to significant revenue growth in 2021,” Andrew Norwood, Vice President, Research, at Gartner, said in a statement.

Intel’s revenue declined 0.3 per cent, garnering 12.2 per cent market share compared to a 12.3 per cent market share for Samsung. Within the top 10, AMD and Mediatek experienced the strongest growth in 2021 at 68.6 per cent and 60.2 per cent growth, respectively.

The most significant shift among the semiconductor vendor ranking in 2021 was HiSilicon dropping out of the top 25.

“HiSilicon’s revenue declined 81 per cent, from $8.2 billion in 2020 to $1.5 billion in 2021,” said Norwood.

“This was a direct result of the US sanctions against the company and its parent company Huawei,” Norwood added.

According to Norwood, this also impacted China’s share of the semiconductor market as it declined from 6.7 per cent market share in 2020 to 6.5 per cent in 2021.

“South Korea had the largest increase in market share in 2021 as strong growth in the memory market propelled South Korea to garner 19.3 per cent of the global semiconductor market,” Norwood said.

ALSO READ-India’s semiconductor hub dream looms over Ukraine crisis

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Europe

Intel to invest $19 bn for chip plant in Germany

The company is also in discussions with Italy to build an Assembly and packing facility there at a cost of up to $4.9 billion…reports Asian Lite News

 Chipmaker Intel said it plans to build a semiconductor plant in Germany as part of an investment of up to 80 billion euros ($88 billion) in Europe over the next decade.

The initial outlay for the facility in Magdeburg, the capital of Saxony-Anhalt, is 17 billion euros ($19 billion), reports TechCrunch.

The so-called “mega-site” will actually comprise two factories. Planning will start right away with construction expected to get under way in the first half of next year, as long as Intel gets the thumbs up from the European Commission.

Production should commence at what Intel is calling “Silicon Junction” in 2027. As such, the plant won’t help offset the global chip shortage any time soon, the report said.

Intel said the dual plants will build chips using its top-of-the-line Angstrom-era transistor tech. It expects to create 7,000 construction jobs for the duration of the build, 3,000 permanent positions and thousands more jobs across partners and suppliers.

Elsewhere, Intel will invest another 12 billion euros ($13 billion) to expand a factory in Leixlip, Ireland. It will double the manufacturing space and expand foundry services there.

The company is also in discussions with Italy to build an Assembly and packing facility there at a cost of up to $4.9 billion.

Intel plans to build its European research and development hub near Plateau de Saclay, France. It expects to create 1,000 jobs as a result, with 450 of those opening up by the end of 2024.

The chipmaker aims to set up its main European foundry design center in France too. Further investments are earmarked for Poland and Spain.

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Business Economy

India’s semiconductor hub dream looms over Ukraine crisis

The Rs 76,000 crore Production-Linked Incentive (PLI) scheme will be spread across six years. As part of the scheme, incentives worth Rs 2.3 lakh crore will be provided to position India as a global hub…reports Nishant Arora

As India kicks off local manufacturing of semiconductors to cut dependency on China, the shortage of raw material amid the Russia-Ukraine war which, if lingers for a longer period of time, may hamper the country’s dream to produce high-end semiconductors and become their global hub.

The government recently set up the India Semiconductor Mission (ISM) and approved Rs 76,000 crore ($10 billion) for the development of semiconductors and display manufacturing ecosystem in the country.

The Rs 76,000 crore Production-Linked Incentive (PLI) scheme will be spread across six years. As part of the scheme, incentives worth Rs 2.3 lakh crore will be provided to position India as a global hub.

With geopolitical tensions now extending from Asia to Europe and from semiconductor manufacturing to raw material supply, Indian players need to re-evaluate capacity expansion and investment decisions, say experts.

Some raw materials exported from Russia and Ukraine, such as rare gas neon, chemical C4F6 and metals palladium, nickel, platinum, rhodium and titanium are critical for semiconductor manufacturing.

Palladium is used in component production, like for the substrate in PCB.

However, precious metals such as palladium, platinum and rhodium are mainly used in the catalytic converters for vehicles, according to Counterpoint Research.

Titanium nitride (TiN) is a widely used material for semiconductor manufacturing as a diffusion barrier.

According to experts, black swan events, such as the ongoing war, have the potential to cause a significant strain on global supply chains, including potentially impacting chip capacity and spiking chip prices.

“In an interconnected and intertwined world, India will also face some direct or indirect impact in its electronics manufacturing,” Prabhu Ram, Head-Industry Intelligence Group, CMR, told IANS.

The unavailability of crucial upstream raw materials — such as semiconductor-grade neon or palladium — “could have a cascading impact through the supply chain, and impacting especially those manufacturers in Asia, who are reliant on Ukraine”, Ram said.

The PLI and the scheme for promotion of manufacturing of electronic components and semiconductors (SPECS), among others, have triggered the shift of manufacturing from other countries to India.

In such a scenario, raw material shortage may derail the country’s dream.

Pankaj Mohindroo, Chairman of India Cellular and Electronics Association (ICEA), said that there should be no major impact on the semiconductor market in the country due to the Ukraine crisis.

“However, since oil prices have gone up, several commodities are becoming costlier. Overall, the consumer electronics industry may face a short-term price fluctuation if the prices of raw material that come from Ukraine keep going up and the situation does not stabilise soon,” Mohindroo told IANS.

According to Brady Wang from Counterpoint Research, small and medium chipmakers and allied businesses may face increased supply pressure owing to exhausted inventories and the difficulty in connecting with new sources if the conflict continues.

“Rapidly rising metal (nickel and palladium) prices will represent a new impediment to the revival of the automotive market if the conflict continues,” he said.

In the medium term, the lack of the aforementioned raw materials will have little influence on semiconductor producers. The situation will be managed through existing inventory and other suppliers.

However, it is inevitable that prices will rise significantly.

“If the conflict persists, supply chain uncertainty will keep raw material inventories at higher levels for a longer length of time. Supply chain management will become more complicated as well,” Wang noted.

The worldwide chip shortage will exist well into the last part of 2022, and possibly even 2023, according to the latest US Commerce Department report on semiconductor supply chain.

Manufacturers have already seen their stocks of semiconductors plunge amid the global chip shortage.

A recent survey of more than 150 firms found that supplies had fallen from an average of 40 days’ worth in 2019 to just five days in late 2021.

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