Mint Primer | Old chips in new fab: Why is India spending $25bn?
India is set to roll out new incentives for its semiconductor initiatives. Most of the sum is expected to help India attract at least four more chipmakers with fabs. But these projects may end up making legacy chips based on old tech. Why is India spending so much?
What are legacy chips? Are they important?
Semiconductor technologies keep evolving. The size of a single chip, right now in nanometres (nm), typically denotes how advanced it is. Semiconductor chips used in the latest consumer gadgets, such as Apple iPhones and Google Pixels, use cutting-edge 3nm chips. These, though, aren’t required ubiquitously. Chips are used across industries such as automotive, aerospace, defence and power. These largely use legacy chips—which use nodes of around 100nm or above. They are critical to helping most things work today, but are no longer too expensive to be mass-produced—hence serving a key purpose.
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Who will produce the legacy chips?
Union IT minister Ashwini Vaishnaw said that the Tata-PSMC chip fab—currently the only announced commercial chip fab in India—will produce chips of 28nm to 90nm. The latter are typically referred to as ‘mature’ nodes—chip tech that isn’t too old and offers better performance and lesser power consumption than legacy chips. These have wide industrial use. However, the Tata-PSMC fab is also likely to produce legacy chips to serve India’s needs which would help the government to significantly reduce imports. Making legacy and mature chips will also help India generate more revenue domestically.
Does cutting-edge chip tech exist in India?
No. So far, the only operational chip fab in India was the Semi-Conductor Laboratory in Mohali. It produces 180nm or older chips, which have defence, space and research applications. Taiwan is the only global hub for making cutting-edge chips, with more than half the world’s best chips being made by Taiwan’s TSMC. Industry veterans say India is 20 years behind.
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That must be bad for the Indian economy?
Not making the latest chips is not a bad thing. Manufacturing mature and legacy chips can add billions in value to industries, since chips make for up 50% of the cost of making consumer gadgets, and make single-digit contributions in sectors such as automobiles or energy. Older generation chips strike the right balance—they cost less, are technically less complex, and thus need lower sops. With the right strategy, India’s $25 billion can create an ecosystem that supports more advanced chips in the decades to come.
What is India missing out on?
Advanced chips have unparalleled geopolitical significance. With US-China ties strained, and Taiwan’s geographical proximity to China, global leaders and tech veterans want to diversify the supply chain of cutting-edge chips for consumer electronics. However, globally, only a few firms have the know-how and capital to make the latest chips. While India may gain critical geopolitical leverage by making them, a domestic supply chain needs to be developed first. If done right, global companies may turn to India.
