Indian Semiconductor Industry- The Road travelled and the Road Ahead

Road Travelled

The global conversation surrounding the semiconductor industry has intensified recently. These tiny chips are the unsung heroes of our modern technology, enabling smartphones to Artificial Intelligence. I had the privilege of interacting with some semiconductor industry veterans who offered insights into the journey traversed and the potential that lies ahead.

Many of us might be surprised to learn that India has been producing state-of-the-art semiconductor chips since the 1970s. Leading this was a prominent Public Sector company (PSU). The strategic collaborations with a leading semiconductor company in the United States and the use of bipolar linear, bipolar digital, and CMOS digital technologies resulted in the PSU producing a diverse range of Integrated Circuits (ICs) catering to various sectors.

• Consumer and telecom electronics: The ICs produced had an impressive range like OP amps, voltage regulators, timers, radio ICs, ICs for telecom exchanges, telephone instruments, and B&W TV receivers that powered everyday devices. Most of the ICs used in Black &White TVs, telephone instruments, and telephone exchanges in the 1980s were homegrown.
• Military and space grade ICs: Back then, our ambitions pushed boundaries to achieve milestones in specialized chips as well. The Military-grade ICs were designed to ensure robust and smooth functioning of India’s defense equipment. The space-grade ICs catered to the requirements of India’s space programs.
• Power and RF transistors: The range included discrete low-power, high power, and RF transistors.

These semiconductors were made using 100mm wafers with bipolar linear, bipolar digital, and CMOS ICs. The manufacturing was vertically integrated from chip design, reticle making, chip fabrication, packaging, and test. The in-house design center designed many ICs specific to Indian needs apart from standard ICs.

Shifting Gears As We Travel

Technology Shift: With rapid digital transformation, the requirement for ICs started shifting towards CMOS from Bipolar. The CMOS technologies kept changing in terms of line widths due to increased requirements on processors and memory chips in terms of performance and density. Each technology node change called for technology sourcing, increased wafer size, and huge capital equipment investments in billions of dollars. Added to this, the life cycle of products was shortening due to rapid technology changes, resulting in shrinking market windows to recover investments. Even packaging and test facilities became quite complex requiring higher investments due to increased functional complexities and increased pin counts. Because of this the focus in India shifted to chip design. The availability of a large talent pool here, enabled many multinationals and Indian startups to setup their chip design centers over the past two decades. While a few packaging and test houses also started their operations, the actual chip fabrication still happened in foundries outside of India.

Semiconductor Chain and Investments

The Semiconductor manufacturing chain involves design, fab and assembly, and test. In terms of business models, we have:

• Integrated Device Manufactures (IDM) – They design and manufacture their own ICs (Intel, Samsung, Texas Instruments).
• Fabless Semiconductor - These companies design the chips but rely on foundries to manufacture them (AMD, Nvidia, and Qualcomm).
• Merchant or Pure play Foundries – These specialize in manufacturing the chips, which are designed by design houses (GlobalFoundries, TSMC, and UMC).
• Lately, a new business model is evolving with IDMs offering foundry services.

In terms of comparative investments required:

• Design houses require lower investments.
• Packaging and test facilities require moderate investments.
• Fabs require the highest investment of billions of dollars.

Road Ahead

As discussed earlier in this blog, India has a strong and globally recognized presence in chip design. However, our current ecosystem lacks fabrication, assembly, and test manufacturing units. Among other incentives that encourage design and product development, the new semiconductor policy addresses this gap by offering significant incentives and subsidies to attract investments in these crucial areas of chip manufacturing, test, and assembly. This presents a tremendous opportunity for both Indian and global players to build a robust domestic chip ecosystem. The recent announcement of three projects, two in packaging and test and one in fab, is indeed a great start to this new beginning.

Thoughts on the Way Forward

• Thrust to the Indian economy - India’s new semiconductor policy, which focuses on attracting investments, holds promise for the economy. This could create high-tech jobs and boost innovation in the related industries. The potential of chip designers can be tapped to design chips focused specifically on Indian market segments like chips for two-wheelers, solar power management, and precision agricultural equipment.
• Research on alternate material - Focus on research to find alternate material for silicon since many experts believe silicon has reached its limits and will find it difficult to scale up further. By becoming the first mover in this, we can lead the next-generation semiconductor revolution.
• Skilling up the workforce – A highly skilled workforce is vital. Collaboration with universities on training programs and focus on STEM education at the high school level can help create the much-needed talent pool for the future.
• Long-term vision – While the existing policy is attractive, we will need to ensure regular review and updates are considered based on the technological landscape and geopolitical climate. This will enable us to engage and take on the fierce global competition.

By addressing these aspects, India can create positive ripples and position itself as a key player in the chip ecosystem comprising of fabs, design centers, packaging facilities, and testing labs.

Presence of Cadence in this Ecosystem

Cadence plays a crucial role as a leader in Electronic Design Automation (EDA), leveraging Intelligent System design to provide hardware, software, and IP Solutions that translate design concepts into tangible world-class products. Cadence serves a wide range of market applications, including communications, aerospace, automotive industry, health care, and more. With India becoming a key global player in the semiconductor industry, Cadence will continue to play a vital role in delivering cutting-edge technology and solutions that lead and enable innovation.

To learn more about Cadence transforming the world of electronics, visit us at Cadence Design Systems

Acknowledgements: I would like to thank Dr. Ananda, Mr. Raghavendra, and Mr. Subash Chandra, the chip industry veterans who were deeply involved in the Indian semiconductor industry from 1970 to 2000, for their invaluable input and feedback.

This blog is authored by Dharini SubashChandran.