(Brig (retd) GB Reddy)
(Our Special Correspondent)
Designing chips is now easier than ever; but not the astronomical costs of establishing units. A report in 2011 from McKinsey put the typical cost of an advanced fab at $3bn-4bn. More recently, Tsmc’s 3nm factory, completed in 2020, in southern Taiwan, cost $19.5bn. The firm is already pondering another for 2nm chips. Now, factories require spending vast sums with plasma-etching kits, vapor-deposition devices and 180-tonne lithography machines the size of a double-decker bus. In absolute terms, the cost of high-tech “fabs” has grown relentlessly. Samsung, a South Korean conglomerate, wants to invest more than $100bn over ten years in its chip business. “Tsmc”, which turns blueprints into silicon on behalf of firms like amd and Nvidia, has increased capital spending to as much as $28bn.
China has set an ambitious target of producing 70 per cent of its chip needs in-house by 2025 — assuming a $220 billion consumption, that is around $150 billion. The Chinese plan is to become self-sufficient in critical technologies by 2025 due to American sanctions depriving it foreign imports. India’s semiconductor market, pegged at $119 billion in 2021, will grow at a compounded annual rate of 19 percent to $300 billion by 2026. New Delhi’s strategy is twofold — lure in foreign companies and build on areas where India has an advantage, such as chip design. India woefully lags in the establishment of semiconductor wafer fabrication (FAB) units – due to a weak ecosystem and shortage of resources as compared to more competitive bases like China and Vietnam. For years technology companies bought chips off the shelf. Under the India Semiconductor Mission (ISM), four schemes have been introduced with fiscal support to eligible applicants to include: for setting up of various categories of Semiconductor Fabs; setting up Display Fabs; setting up of Compound Semiconductors/Silicon Photonics/Sensors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities; and design Linked Incentive (DLI) Scheme. The ISM will coordinate with the applicant companies and work closely with the state governments to establish high-tech clusters with 300 – 500 acres of developed land, 100 KVA Power, 50 MLD Water, availability of natural gases and common facility centres for testing and certification. The government has already identified institutes where 85,000 engineers will be trained for semiconductor manufacturing. The Government has also handed over SCL Mohali to MeitY from the Department of Space and opened it up as a commercial Brownfield Fab for wider participation by Indian semiconductor design companies.. The first round of applications was invited till February 15 2022 for the establishment of Semiconductor Fabs, Display Fabs, Packaging and Designs. Three companies – Vedanta in JV with Foxconn, Singapore headquartered IGSS Ventures Pte and ISMC – have submitted proposals for setting up 28nm to 65nm Semiconductor Fabs with capacity of approx. 120,000 wafers per month and the projected investment of $13.6 billion wherein fiscal support from the Government sought for nearly $5.6 billion. And, for Display Fabs from two companies – Vedanta and Elest – have submitted applications for setting up Gen 8.6 TFT LCD Display Fab as well as 6th Generation Display FAB for the manufacture of State-of-art AMOLED display panels that are used in the advanced smartphones with the projected investment of $6.7 billion seeking fiscal support from the Government for nearly $2.7 billion. For Semiconductor Packaging, four companies – SPEL Semiconductor Ltd., HCL, Syrma Technology and Valenkani Electronics – have registered. Under Compound Semiconductors Scheme, Ruttonsha International Rectifier Ltd. has registered. Under the design linked incentive scheme, Terminus circuits, Trispace Technologies and Curie Microelectronics have submitted applications.
Hardware – Supercomputers, PCs, Laptops and Smartphones: Next, where does India stand in the “Top 500 Superfast Computers” ranking? The No. 1 spot is now held by the “Frontier system” in the US surpassing the 1 exaflop barrier – the first exascale most powerful supercomputer to ever exist. By comparison with characteristics like R/Peak and R/Max T/Flops, Indian superfast computers in Top 500 List further pale into insignificance. As of November 2022, India stands jointly with three other nations at 13th place with four Superfast computers, which in total numbers of superfast computers is woefully insignificant compare to China with 173, US with 149, Japan with 32, Germany with 26, France with 19 and Canada and UK with each.
In 1970, government created Department of Electronics (DoE) to regulate electronics industry. One of the mandates of DoE was to build indigenous computers. DoE also introduced license raj in the electronics industry resulting in ‘stunted’ growth of hardware. In 1971, the government did not approve Delhi Cotton Mill (DCM) proposal to collaborate with Japanese giant Sony to build calculators. However, DCM built first indigenous calculator in 1972. In 1975 DCM launched India’s first microprocessor. DCMs ‘Core Team’ left and founded HCL or Hindustan Computers Limited as a joint venture with Uttar Pradesh Electronics Corporation Limited.
It was only in 1981 government liberalized unfriendly policies and allowed import of computers against obligation to export software. C-DoT’s mandate was to build digital exchanges for telecommunication in India. C-DoT’s innovative all weather rugged digital switches pulled off telecom revolution in India. In 1986 government further liberalized its policy and made it easier to import hardware and software. They had no choice but to partner with the global giants.
Subsequently only, multiple projects were commissioned from different organizations. The project “Flosolver MK1“ was initiated only in December 1986. The Centre for Development of Advanced Computing (C-DAC) was created in November 1987 and was allotted a three-year budget of Rs 375 million to create 1000Mflops (1Gflops) supercomputers. Other organizations like NAL, BARC, and ANURAG were created. In 1988, the US Government refused to sell India a Cray supercomputer due to concerns about India using it to develop nuclear weapons. In response, India started development of its own supercomputer. The “PARAM” (short form for Parallel Machine) series of supercomputers were designed and assembled at Pune in three missions.
In 2015, the launch of the National Supercomputing Mission (NSM) boosted the pace of Indian supercomputers. NSM announced a seven-year programme worth Rs 4,500 crore to install 73 indigenous supercomputers by 2022. However, as of May 2022, there are 15 superfast computers only in India. Out of them, four are in the Top 500 Global Ranking list to include: PARAM Ananta (Global Ranking 102) developed under the NSCM by C-DAC and IIT Gandhinagar, that has only a peak performance of 3.3 Petaflops; 111 – PARAM Siddhi-AI at C-DAC (R/Peak – 5,267.1); 132 – Pratyush (Cray XC40) at Indian Institute of Tropical Meteorology, Pune (R/Peak – 5,267.1) and at 249 place – Mihir (Cray XC40) at the National Centre for Medium Range Weather Forecasting, Noida, (R/Peak – 2,808.7). Add to the four, there are other supercomputers today in India to include: PARAM Shivay at IIT, BHU; PARAM Shakti at IIT-Kharagpur; PARAM Brahma at IISER Pune; PARAM Yukti at JNCASR, Bengaluru; PARAM Sanganak at IIT Kanpur; PARAM-ISHAN at IIT Guwahati; and PARAM Pravega at the IISc, Bengaluru etc.
Next, the development of personal computers industry began in 1977, with the introduction of three preassembled mass-produced personal computers in the advanced countries: the Apple Computer, Apple II, the Tandy Radio Shack TRS-80, and the Commodore Business Machines Personal Electronic Transactor (PET). The global computers market grew from $369.94 billion in 2021 to $416.79 billion in 2022 at a compound annual growth rate (CAGR) of 12.7%. India accounts for a fraction of that at around $11 billion. Due to WTO Agreement in 1997, the PC and Laptop manufacturing, electronics manufacturing, smartphones and I-phones industry has been virtually destroyed.
In 2020 only, under the Production Linked Incentive (PLI) Scheme was launched. The outlay for mobile phone PLI is Rs 40,951 crore over 5 years, with incentives ranging between 4-6% annually. The government’s strategy, combined with a huge domestic market, helped India to become the world’s 2nd-biggest mobile phone producer after China.
In 2021, the PLI scheme worth Rs 7,350 crore was launched to boost local manufacturing and exports of IT products for laptops, tablets, all-in-one personal computers and servers with a view to cut imports, especially from China. In the first year (FY22) hardware production is Rs 2,000 crore only. And, the results have been lackluster. Only four of the 14 eligible players under the scheme in the first year of operations have succeeded in meeting their production targets and will receive incentives. Only 18% of all PCs sold in India are now manufactured locally. Also, India now accounts for 5% of global PC shipments with- exports jumping to 5.8 million units. Due to demand in the IT sector, imports of laptops and tablets have gone up sharply by over 53% from $5.2 billion in FY21 to $8.0 billion in FY22. The Manufacturers Association of Information Technology (MAIT), the apex IT hardware association, has requested the government to double the duration of the PLI scheme to eight years and to increase the incentive from Rs 7,350 crore three-fold to around Rs 21,000-22,000 crore.
Overview: To sum-up, political leader’s phenomenal lack of foresight ab initio was real after 1947. Naturally, IT industry components failed to exploit opportunities in the early stages of the “3rd Industrial Revolution, or Digital Revolution” after World War II that spread automation and digitization through the use of computers and the invention of the Internet. License Raj until early 1980s and the WTO Agreement in 1997 stunted the growth of “Hardware” industry. Yet, the private entrepreneurial spirit pursued with rigor developed the “Software” industry to present “Superpower” status.
India lagged woefully behind until 1985 in semiconductor chip making and computer hardware – nearly 40 years behind in realizing and launching projects to develop computers and the budget allocation was meager. Now, the pace of development of IT, particularly, has improved after 2014; but the allocation of financial resources, liberalization and incentives remain meager. If India wants to catch up with the top 4-5 countries, the government must demonstrate political will and promote the industry with credible strategies in all fields of IT. Also, the structures and roles of each organization be reviewed to eliminate non-essentials departments involved in activities other than executing primary roles. Also, examine the feasibility of mergers to ensure cost-effective and optimum management. Whereas, the Tsmc’s 3nm factory completed in 2020, in southern Taiwan, cost $19.5bn. And, the firm is already pondering another for 2nm chips. India’s present plan is to manufacture 28nm to 65nm Semiconductor Fabs. Surely, the Indian government and private industry needs to make a quantum jump to catch up with the Tsmc, Samsung and Intel. Currently, the 4th Industrial Revolution is sweeping, known as the Information age or Imagination Age or as the Computer Age or Digital or Silicon Age and New Media Age, beginning in the mid- 20th Century. And, there is paradigm shift from traditional industry to an economy primarily based upon IT and, the trend towards automation and data exchange in manufacturing technologies and processes which include cyber-physical systems (CPS), IoT, industrial internet of things, cloud computing, cognitive computing, and artificial intelligence that offers tremendous opportunities to exploit.
