Representative image of workers on the assembly line of a mobile phone factory | Photo source: Reuters
Semiconductor design initiatives should be supported through better fundraising opportunities in the country and incentives for apply of domestically registered intellectual property (IP), the Indian Cellular and Electronics Association (ICEA) said in a report released on Thursday. The report says that as China’s semiconductor industry faces hesitant investors due to geopolitical tensions, India must capitalize on the strategic opportunity presented by semiconductors.
Referring to arguments by economists such as Raghuram Rajan that the push for semiconductors may not create optimal economic opportunities (or in terms of jobs), Pankaj Mohindroo, chairman of ICEA, strongly pushed back, calling such arguments “self-defeating for India”. “Capacity building in advanced technologies and semiconductors is critical,” Mr. Mohindroo said.
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“Even though we have 20% of the world’s semiconductor engineers, none of the IP addresses belong to India,” noted AM Devenranath, CEO of research firm Feedback Advisory. Instead, engineers work for global Indian companies that register intellectual property in the US or elsewhere. Mr. Mohindroo suggested that incentives should be created for the apply of domestically registered intellectual property in key sectors, such as the expansion of telecommunications networks.
The report highlights the strengths of other countries that have had some success in the semiconductor supply chain: China has “over-invested” in low-tech chips, causing global prices and investment appetite for chip research to plummet, while opening up initiatives to provide access to straightforward financing thanks to the early exit of investors; Malaysia has focused heavily on outsourced semiconductor assembly and testing (OSAT), an area in which it ranks fourth after Taiwan, China and the US.
Ministry of Electronics and Information Technology Secretary S. Krishnan said in the foreword to the report that the government’s efforts are “perfectly in line” with the suggestions in the ICEA report. “While India has made significant progress in electronics manufacturing, the semiconductor industry requires targeted policy action,” Krishnan said.
The report’s most critical suggestion is to follow China’s example, which subsidizes photomasks (also known as mask kits), equipment similar to photocopier plates that allows precise, selective illumination of featherlight on silicon wafers. Photomasks are an pricey but critical component in chip production. China subsidizes 80% of the cost of photomasks for semiconductor companies; a similar incentive should be provided in the design incentive program run by the Ministry of Information Technology, ICEA suggests.
