Powering India's Semiconductor Ambitions via Technology Transfer

Table of contents

The global semiconductor industry is transforming due to geopolitical shifts, supply chain disruptions, and the rising need for self-reliance. Recognizing semiconductors as a strategic asset, India has launched initiatives to boost domestic manufacturing. Technology transfer, acquiring, assimilating, and advancing global semiconductor technologies will be pivotal in realizing India’s semiconductor ambitions.

Importance of Technology Transfer in Semiconductor Manufacturing

Technology transfer plays a pivotal role in building India’s semiconductor manufacturing capabilities by enabling the acquisition, assimilation, and advancement of cutting-edge technologies from global players. It serves as the backbone of creating a self-reliant semiconductor ecosystem.

Key Aspects of Technology Transfer

Manufacturing Know-how: Facilitates large-scale, high-quality semiconductor chip production with precision.
Intellectual Property (IP) Sharing: Grants access to patents, proprietary technologies, and trade secrets essential for advanced fabrication.
Equipment and Process Expertise: Transfers knowledge on specialised fabrication machinery, cleanroom processes, and quality control techniques.
Talent Development: Provides skill-based training to engineers, scientists, and apprentices in microelectronics, material science, and chip design.

Significance for India

Bridging Capability Gap: Helps India overcome its limited indigenous semiconductor manufacturing capabilities.
Reducing Import Dependency: Strengthens domestic production and safeguards against supply chain disruptions.
Boosting Employment & Innovation: Generates jobs and fosters technological innovation through local production units.
Strategic Autonomy: Supports critical sectors like defence, telecommunications, and energy, enhancing India’s national security and technological sovereignty.

Current State of India’s Semiconductor Industry

Heavy Import Dependency: India imports 90-95% of its semiconductor needs from Taiwan, South Korea, the US, & China, fueled by the expanding electronics manufacturing, 5G rollout, & AI-driven industries.

Government Interventions

Production Linked Incentive (PLI) Scheme: Offers financial incentives of up to 50% of project costs to promote semiconductor fabrication and assembly units.
Design Linked Incentive (DLI) Scheme: Provides up to 50% of eligible expenditure to encourage semiconductor design, IP development, and innovation.
India Semiconductor Mission (ISM): A dedicated initiative with an outlay of ₹76,000 crore to develop a robust semiconductor ecosystem through investment and R&D support.
Global Collaborations: Engagement with TSMC, Intel, and Micron to establish semiconductor manufacturing facilities and strengthen supply chains.

Challenges in Technology Transfer for India

Lack of Domestic Expertise: India excels in semiconductor design but lacks advanced fabrication (manufacturing) capabilities.
Geopolitical Barriers: Strategic balancing between the US, China, and Russia affects India’s access to critical semiconductor technologies.
High Capital Costs: Setting up semiconductor fabs requires $5-20 billion with sustained demand and supply chain support.
Intellectual Property Protection: Weak IP protection laws deter global companies from transferring proprietary technologies.
Lack of Skilled Workforce: Shortage of specialised engineers in materials science, microelectronics, and chip fabrication.
Infrastructure Gaps: Deficiency in uninterrupted power, ultra-pure water, and advanced logistics needed for semiconductor fabs.

Opportunities for India in Semiconductor Technology Transfer

Strategic Alliances: Strengthen ties with global players through Quad and US CHIPS Act. E.g., India-US partnership for semiconductor talent and supply chain resilience.
Foreign Direct Investment (FDI): Offer incentives, tax benefits, and policy stability to attract global manufacturers. E.g., Micron’s $2.75 billion semiconductor facility in Gujarat.
Public-Private Partnerships (PPP): Foster collaboration between Indian firms and global semiconductor giants. E.g., Tata Group’s talks with Japanese and Taiwanese firms for chip manufacturing.
Intellectual Property (IP) Protection: Align IP laws with global standards to ensure technology security. E.g., strengthening patent laws to encourage foreign investment in R&D.
Developing a Skilled Workforce: Partner with global universities, promote industry-academia collaborations, and set up research parks. E.g., India Semiconductor Mission’s skill development initiatives.
Focus on Compound Semiconductors: Specialise in gallium nitride & silicon carbide for defence, 5G, and EVs. E.g., India’s investments in power electronics and 5G semiconductor research.

Case Studies

Taiwan (TSMC): Taiwan leveraged technology transfer from the US and Japan in the 1980s to build a dominant semiconductor industry. The government provided strategic funding for R&D, support for TSMC and UMC to become global leaders and strong protection for intellectual property.
South Korea (Samsung, SK Hynix): It acquired semiconductor technology through partnerships with the US and Japan, later investing heavily in R&D to become a global leader.
China (SMIC): The country has aggressively pursued technology transfer via acquisitions, talent poaching, government-backed research, etc. to reduce dependence on US technology.

Way Forward

Global partnerships with strategic alliances: Deepen collaboration with QUAD, US CHIPS Act, and trusted technology partners. E.g., the India-US Semiconductor Talent Initiative.
Boosting domestic R&D ecosystem: Establish semiconductor R&D parks and chip design centres with public-private partnerships. E.g., C-DAC’s advanced microprocessor design program.
Infrastructure development: Build semiconductor clusters with uninterrupted power, clean water, and logistics. E.g., Semiconductor Manufacturing Cluster (SMC) in Dholera.
Skilled workforce development: Launch targeted training programs in collaboration with global universities. E.g., India Semiconductor Mission’s skill development initiatives.
Strengthening IP laws: Align with TRIPS standards to assure foreign players of technology security. E.g., National IPR Policy 2016 reforms.
Diversification in niche sectors: Focus on compound semiconductors for EVs, 5G, and defence applications. E.g., DRDO’s GaN-based power electronics research.

India’s pursuit of semiconductor manufacturing aligns with Atmanirbhar Bharat. As Prime Minister Narendra Modi stated, “When India commits, India delivers.” This journey signifies India’s innovation and global partnerships. Leveraging technology transfer, infrastructure development, and talent cultivation, India can reduce dependency on foreign players and ensure technological resilience.

Reference: Livemint | PMFIAS: Semiconductor Industry

PMF IAS Pathfinder for Mains – Question 97

Q. In light of the shifting geopolitical landscape, critically analyse the role of technology transfer in India’s ambition to ascend the semiconductor value chain. Discuss the challenges and opportunities associated with this endeavor. (15 Marks) (250 Words)

Approach

Introduction: Define technology transfer and briefly highlight India’s semiconductor import dependence and the significance of self-reliance.
Body: Discuss semiconductor initiatives, challenges in technology transfer, opportunities through alliances and FDI, and a way forward with policy reforms, infrastructure, and skill development.
Conclusion: Emphasize technology transfer as a pivotal step for India’s Atmanirbhar Bharat ambitions and the need for a multi-pronged approach to build a self-reliant semiconductor ecosystem.