The semiconductor industry is both foundational and transformative, enabling modern electronics to thrive. Semiconductor fabrication plants, or "fabs," are critical in turning silicon wafers into powerful chips that drive devices like smartphones, laptops, and automobiles. Each new generation of fabs, measured in nanometres (e.g., 28nm or 2nm), marks a significant technological leap toward smaller, faster, and more energy-efficient chips. However, progressing to cutting-edge technology requires immense financial investment and years of research.
India’s current focus on 28nm technology represents a starting point in its semiconductor journey. Transitioning to more advanced nodes, such as 2nm, could take over a decade and require investments exceeding $100 billion. While only a few nations possess the resources and expertise to navigate this complex landscape, India is taking its first steps with determination. Recent agreements, including those led by Prime Minister Narendra Modi in Singapore and collaborations with Adani and Tower Semiconductor, signal India’s ambition to establish itself as a semiconductor powerhouse.
The Role of Process Innovation
The difficulty of building and advancing fabs lies in the sheer complexity of process innovations. Progressing from one generation to the next demands an ecosystem of continuous improvements in yield management, defect reduction, and supply chain optimization. These incremental innovations, often undocumented, are critical to achieving higher yields and improved performance.
For example, even with similar equipment and processes, two fabs might achieve vastly different yields — one as high as 70% and another as low as 10%. Such differences underline the significance of day-to-day learnings within fabs. Beyond acquiring expensive machinery like extreme ultraviolet (EUV) lithography systems, the success of semiconductor manufacturing hinges on mastering the intricacies of transistor architecture and materials integration.
Why Skipping Steps Isn’t Feasible
In the semiconductor industry, skipping directly to advanced technologies without mastering foundational nodes is nearly impossible. For instance, FinFET transistors became the standard at the 7nm node, while newer architectures like gate-all-around (GAA) are emerging for 3nm and 2nm nodes. Developing these technologies involves years of experimentation and iterative refinement, which cannot be fast-tracked solely through financial investments or theoretical knowledge.
Partnerships as a Catalyst
While gradual progression is the norm, strategic partnerships with established industry leaders can help nations accelerate their semiconductor ambitions. Countries like the United States, Germany, and Japan have recognized this and incentivized giants like Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics to establish fabs on their soil.
India, too, has the opportunity to leverage its improving relationships with countries like South Korea and Taiwan to gain access to advanced technologies and expertise. Such collaborations could help India bypass some of the challenges and shorten its path to becoming a significant player in the semiconductor space.
Toward a Self-Reliant Future
The ultimate goal for India is to achieve self-reliance in semiconductor design and manufacturing, enabling its digital economy and strengthening its geopolitical autonomy. This journey also provides an avenue to capitalize on India’s top-tier engineering talent, particularly if there is a broader shift toward balancing hardware and software capabilities in the tech sector. Policymakers and investors have several opportunities to support this vision and foster greater ownership of hardware assets by Indian companies.
India’s semiconductor journey is just beginning, and while the road ahead is challenging, the early steps signal a promising future. With strategic partnerships and a commitment to innovation, India can lay the groundwork for long-term success in this critical industry.
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