First semiconductor fabrication plant can help plug in to global value chain

Syllabus: GS- III Subject: Economy Topic: Industry and Industrial policies, Issue: Semiconductor manufacturing

Context: The Union Cabinet approved a semiconductor fabrication plant in partnership with Taiwan’s PSMC.

Gist:

• Fabs(Fabrication plants) are the highly specialised semiconductor manufacturing facilities that print the miniaturised integrated circuits from the chip design into the silicon wafers.
• 70% of the current global semiconductor manufacturing capacity is confined to South Korea, Taiwan and China.

Incentives:

1. Semicon India programme: Rs 76,000 crore chip incentive scheme, under which the Centre offers half the amount of a plant’s capital expenditure costs as subsidy.
2. Production linked incentive (PLI) scheme
3. India’s plans are focused on boosting all three aspects of the semiconductor ecosystem –
   • full-scale foundries that can manufacture chips.
   • assembly and testing projects called OSAT plants;
   • packaging units called ATMP facilities;

Challenges:

• Heavy competition from countries like the US and EU
• Talent pool: While India possesses talented chip designers , skilled labour in factories is the need of the hour.
• Lacking original research in semiconductor design.