Mahatma Gandhi’s charkha spun the history of India’s independence revolution, leading to political liberation. It was not only a symbol of free India but also a hope for a self-reliant, socio-economically developed India, giving birth to one of India’s iconic symbols of swadeshi, the khadi industry. The Sabarmati Ashram birth of khadi in 1918 took an institutional shape in 1924 when the All India Khadi Board was established. Exactly 100 years later, Vikshit Bharat@2047’s version of self-reliance has arrived with a difference. The hand-charkha is replaced by a hi-tech chip.
Prime Minister Narendra Modi’s foundation-laying function for three semiconductor plants in Dholera and Sanand in Gujarat, and in Morigaon in Assam is a west-to-east sweep of India’s emerging role in this critical global asset.
Chris Miller’s Chip Wars (2022) traces the evolution of the global chip manufacturing industry shaped by geopolitical, technical and economic forces, making it the cornerstone of a transformational economy. The Covid times saw turbulence in the chip supply chain that shook the automobile, hi-tech and consumer electronics industries, shifting the headlines from the end-product to the core chip component. Post-Covid, the global chip manufacturing industry is experiencing America’s semiconductor tech rivalry with China and China’s deepening of local chip manufacturing and supplies industry. Japan, Taiwan and South Korea are also re-calibrating their chip competence to the emerging global order.
While these active foot-soldiering countries of chip manufacturing found new ways of building newer strategies, the Indian government paratrooped into the policy space in 2022 with an India Semiconductor Mission (ISM). It has an ambitious outlay of Rs 76,000 crore to build a self-reliant semiconductor manufacturing ecosystem to not only boost indigenous chip manufacturing, but also make India a global hub for electronics manufacturing.
Gordon Moore’s eponymous law has been shrinking the size of chips and making scale economies for the manufacturing industry catalyse government policies to maintain supremacy. Chip Wars traces Taiwan, US, Europe, South Korea and China’s internal adjustments to demonstrate the geopolitical undercurrents of the chip tech age. The US’s CHIPS Act, Taiwan’s historical and continuing engagement with TSMC, the world’s most advanced chip producer, and other producers and universities, and China’s Xin Chuang or infotech innovation project show governments’ role in the semiconductor value chain. This is inevitable as corporate giants are growing taller and chip technology getting competitively smaller at the nano level.
Let us take two recent examples signifying the globally competitive ecosystem, while the success stories of TSMC, Samsung and Intel continue to dominate.
Nvidia’s sudden growth in market capitalisation, thanks to the artificial intelligence (AI) wave, has made it the third most valued company next to Microsoft and Apple. Nvidia’s valuation, which recently soared to $2.4 trillion, may soon replace Apple in the second position. Controlling over 80 percent of the global AI chip market with its dominant network kit and software market share, Nvidia’s arrival with a bigger bang is deep-tech’s watershed moment.
Some Japanese players also experienced their ‘Nvidia moment’, with Elektron, which specialises in chip making equipment, becoming the fourth most valuable company in Japan, pushing behind Mitsubishi, Nintendo and Softbank. The Japanese Big Five chip equipment manufacturers—Tokyo Electron, Advantest, Disco, Lasertec and Screen Holdings—doubled their market cap in one year. The mass production of chips at smaller sizes (up to 2 nanometres) and emergence of transformational technologies such as AI and crypto make the race for semiconductor supremacy fiercer than before. India has no option but to be an active producer, rather than just a consumer.
India’ legacy fab (chip fabrication facility), the 1983-established Semiconductor Complex in Chandigarh, cannot be its 2024 response. Hence it was rightly identified to mid-wife the proposed Bharat Semiconductor Research Centre for research capacity building. Previous projects such as RISC-V and Shakti are only scratching the surface, with no major impact.
Modi’s ISM is going to be a game-changer in many ways. With India’s strong and globally competitive position in fabless design, ISM blew the whistle for India to join the global chip manufacturing race. Tata’s historic ‘We also make steel’ campaign once highlighted its corporate social responsibility and urge to move forward; Its ‘We also make chip’ will definitely emerge as its nation-building responsibility as India embarks on a momentous journey in chip manufacturing. Tata Electronics’ strategic partnership with Taiwanese firm PSMC and its two plants—a fab at Dholera and an outsourced semiconductor assembly and test facility (OSAT) at Morigaon, along with CG Power’s OSAT at Sanand—is the beginning of the indigenous chip revolution with a combined investment of Rs 1.26 lakh crore, with over 90 percent of it coming from the Tata Group.
The growing demand for an employable workforce for the semiconductor and electronics manufacturing industry in India is all set to exceed 6-7 million by 2027. Higher educational institutions, including some IITs, have taken some early steps for others to follow as companies such as Micron and Tower plan their semiconductor manufacturing facilities in India.
With simmering global tensions affecting the semicon value chain, India’s big leap of faith in this strategic sector cannot come at a more appropriate time—emerging as a safe bridge between the West and the East.
Mahatma Gandhi’s non-violence movement gave India’s political independence. Modi’s chip movement will give India tech independence, as the first chip using Bharat’s silica gets delivered in 2025.
(Views are personal)
(vaidhya@sastra.edu)
S Vaidhyasubramaniam
Vice-Chancellor and Tata Sons Chair Professor of Management, SASTRA (Deemed) University