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• A focus on the entire ecosystem, not merely on one
fabrication unit.
• The programme envisages building the entire
semiconductor ecosystem—from design to
manufacturing to assembly and packaging—instead of
just focusing on one semiconductor fabrication to start
operations in India.
• This articulation is significant because India’s
comparative advantage has long beengmain il.c semiconductor
om

design; nearly every major global.thfirm at0

1@ in the sector has
l
its design house here. sir
e. r a hu
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or
• The Rs 76,000 crore packageOn
l y f
will support
• 100 domestic semiconductor design companies,
• 15 compound semiconductors and semiconductor packaging
units,
• two fabrication units, and
• two display fabs.
• A 20-year roadmap, not merely a one-off incentive
scheme
• The package includes creating an independent India
Semiconductor Mission (ISM) of global experts to “drive
the long-term strategies for developing sustainable
semiconductors and display ecosystem”.

• A shot in the arm for domestic semiconductor a i l . co

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design firms l.t h a t01
@
u
• Though India is a semiconductor e sir
e . r ah design powerhouse,
few Indian companies own l y f or these designs’ intellectual
d
On
property (IP). In this regard, an emphasis on
semiconductor design through the new Design Linked
Incentive (DLI) scheme for semiconductor design firms is
a positive step. The DLI scheme provides financial
incentives to help domestic design firms obtain costly
software licenses (also known as Electronic Design
Automation tools) and reduce IP acquisition costs.
• A clear target of two semiconductor fabs and two
display fabs
• Fabrication units require billions of dollars of recurring
capital investment. World over, governments have
played a role in sharing this investment burden. The
programme mentions fiscal support of up to 50 per cent
of the total project cost. In the past, the government
had committed to an incentive of 25 per cent on capital
m
expenditure. gm
a i l . co
@
a t01
l.th
ra hu
re.
• Besides fiscal support, this r de stage also requires
si
fo
high-grade power andOwater
nly supply, subjects that fall
under the remit of state governments. Another positive
step is the commitment to work with a few state
governments to create suitable infrastructure (land,
uninterrupted water and power).
• Incentives for the assembly, test, and packaging
stage
• The outsourced assembly and test (OSAT) segment in
the semiconductor supply chain is a significant
opportunity for a labour-abundant country like India.
These units are not as capital intensive to set up or run
as fabrication facilities. Government support in the form
of financial support of 30 per cent of the i l . co
m total capital
a
expenditure can attract major OSAT t01
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gmsemiconductor
a
companies to the country. .rahul.t h
e
e sir
ford
ly
On
• Need For DLI-
• The scheme acknowledges that semiconductor design is
India’s comparative advantage. It says that:
• Nearly 20% of the world’s design engineers are in India
• India has a thriving semiconductor design ecosystem.
• The problems identified under the scheme are:
• Not a lot of Intellectual Property (IP) belongs to Indian
companies. This is problematic as countries are known to put
strict export controls in this domain. So, even i l . co if a foreign
m
ma
company X has a design house in India, @
gthe country where X is
a t01
headquartered can forbid an Indian h ul. customer from using the
th
.ra
products made by X in India. de
sire
f or
• The cumulative revenue On of domestic semiconductor design
ly

companies is really really small, less than ₹150 crores.

• no specific incentive for semiconductor design firms earlier.
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• Scheme for Setting up of Semiconductor Fabs in
India

• The strategic logic behind fabs is clear. The ongoing

shortage has brought the geoeconomic, geopolitical,
and technological meta-criticality of semiconductors to
the surface. Building a more resilient semiconductor
manufacturing stage is in the interest of i l . co
many
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nation-states and companies. t01
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• For companies willing to invest a minimum of Rs 20,000
crores in a logic/memory/analog/Mixed-signal fab at
<=65nm in India, the union government is committing fiscal
support of up to:
• 50 per cent of project cost for 28nm or lower
• 40 per cent of project cost for 28nm to 45nm
• 30 per cent of project cost for 45nm to 65nm
• Applications are open for 45 days initially starting 1 Jan
2022. Support will be extended to at least two applicants
for six years.
m
co
• Disbursement from the union government gm
a will match the
i l .

capital investments by investors at athpredefined at0

1@ ratio, not
exceeding 50 per cent. . r ah
u l .
ire
es
• Selection of applicants will nbe
ly f
or on Quality and Cost Based
d

Criteria (QCBS), not L1. Evaluation

O will be done by the newly
proposed India Semiconductor Mission. Composed of
industry experts, this body is tasked with “driving the
long-term strategies for developing sustainable
semiconductors and display ecosystem”.
• Scheme for setting up of Compound
Semiconductors, Silicon Photonics, Sensors Fab
and Semiconductor Assembly, Testing, Marking
and Packaging (ATMP), OSAT facilities in India

• The scheme provides incentives for broadly two

unrelated things. One, for specialisedmafabs il.c
om used to
g
manufacture high frequency, high tha
t 0power,
1 @
optoelectronic
l .
devices. sir
e . r ah
u

de
or
ly f
On
• Two, for units that do Assembly, Test, Marking, and
Packaging (ATMP) of conventional silicon semiconductor
chips.
• Specialised Fabs included under this policy relate to:
• compound semiconductors: The use of compound
semiconductors is expected to grow for high voltage applications,
LED-powered appliances etc.
• For instance, the use of GaN for chargers is beneficial as it can operate at
higher voltages without conduction losses. These products also switch
more efficiently, and hence low switching losses. The overall effect is that
devices such as power chargers can be made much smaller using
compound semiconductors because the heat to be dissipated is much
lower. For more, read this by STMicro.
• GaAs is used for Surface-mounted Device LEDs used in our bulbs. Silicon
semiconductors emit energy in the infrared range and hence are not
suitable for such applications.
m
i l . co
a
• SiPho Fab. Silicon Photonics allows for higher gm interconnect speeds,
1 @
supporting higher data rates. A lot ofulenergy at0 in information
.th
processing apparently is used up iin re.
rathe communications — not
h
s
logic — over a chip because conventional
f or
de interconnects need to
be discharged and chargedOnfor
l y data transfer. Optical
communication offers hope here. For more, see this article
in Physics World The promise of silicon photonics – Physics World

• MEMS (Microelectromechanical Systems): expected to find more

applications in healthcare, EVs.
• ATMP units: OSAT (Outsourced Semiconductor
Assembly and Test) is a stage of the conventional
semiconductor production process.

• This is where India has a potential advantage because of

the need for a large, mid-level trained workforce for this
stage, in comparison to logic or memorymfabs. This stage
o
il.c
does require high-end equipment but @
gm the recurring
a
1
capital investment required is lesser h u l . tha
t0
than silicon logic or
.ra
memory fabs. Of course, cost
de
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• Scheme Details
• The specialised fabs, companies or joint ventures (not necessarily
Indians) with relevant past experience need to commit to a
minimum capital investment threshold of ₹100 crores. The
capacity commitment is roughly 500 Wafer Starts Per Month for
150/200mm wafer size. After evaluating all applications, the union
government will provide financial support of 30% capital
expenditure.

• For the ATMP, companies or joint ventures (not necessarily

Indians) with relevant past experience need to commit to a
minimum capital investment threshold of ₹50 ccrores. om
After
evaluating all applications, the union government
gm
a i l . will provide
financial support of 30% capital expenditure.
at0
1@
ul.th
.rah e
• Tenure: the scheme is open for sir
eapplications initially for a period of
d
or
three years starting 01-01-2022.
On
ly f

• The disbursement of the financial support begins after the capital

investment threshold has been crossed and commercial
production has begun.
• Scheme for Setting up of Display Fabs in India
• Further, the document goes on to say that the reason display
fabs haven’t succeeded is that manufacturers here face a
10% cost disadvantage due to “the lack of adequate
infrastructure, domestic supply chain and logistics; high cost
of finance; and focus on R&D by the industry; and
inadequacies in skill development.” To compensate for this
disability, an industrial policy instrument of part-financing
two display fabs has been conceived.
m
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a
• Most of the display panel manufacturers 1 @ are located in East
gm
t0
Asia — companies from China, Taiwan, hu
l . tha South Korea, and
a
Japan dominate this industry.desire. r
ro
• displays account for 25 per
n ly fcent cost of mobile devices and 50 per
cent cost of LED/LCD TV OSets.
• The LCD market is dominated by China while the OLED market is
dominated by Samsung and LG (both South Korean companies).
• The strategic case seems to be to reduce import dependence on
China.
• Scheme Details
• For companies willing to invest a minimum of Rs 10,000
crores in manufacturing AMOLED or TFT LCD screens in India,
the union government is committing fiscal support of up to
50 per cent of the project cost.

• Applications are open for 45 days initially starting 1 Jan 2022.

Support will be extended at most to two display fab
manufacturers.
m
i l . co
a
gm
• Disbursement is from the union government t0 1 @ will match the
a
capital investments by investorsraat hu a predefined ratio, not
l.t h
e.
exceeding 50 per cent. rd
e sir
ly fo
On
• Selection of applicants will be on Quality and Cost Based
Criteria (QCBS), not L1. Evaluation will be done by the newly
proposed India Semiconductor Mission. Composed of
industry experts, this body is tasked with “driving the
long-term strategies for developing sustainable
semiconductors and display ecosystem”.