A FAB START, BUT MILES TO GO

Three years on, India's semiconductor ecosystem is a work in progress. The ambition of figuring among the Top 5 semiconductor nations by 2030 has started to take shape, but needs acceleration.

- Nidhi Singal

IN 1972, just four years after it was founded, U.S.-head-quartered Intel made a defining move. The company selected Penang, Malaysia, to set up its first offshore manufacturing facility—a modest plant to package and assemble semiconductor components. By 1975, this plant was a key link in Intel’s global manufacturing chain. Intel’s Penang gambit was a response to Malaysia's Free Trade Zone Act of 1971, which sought to turn Penang into an export-oriented industrial zone by offering tax holidays, tariff exemptions, streamlined regulatory processes, and with sites well linked to highways, railway systems, seaports, and an airport.

Soon after Intel, giants such as AMD (which was born a year after Intel), Hitachi, and HP entered Malaysia. By the early 1980s, 14 semiconductor firms were operating in Malaysia. In just over five decades, Malaysia's early bet on electronics has made it a part of the global semiconductor value chain. Today, it hosts nine front-end fabrication units or fabs and 38 back-end facilities, including advanced packaging and testing units. It plays a vital role in global supply as companies diversify beyond China and Taiwan.

Contrast this with India, which launched its semiconductor push in December 2021 with the India Semiconductor Mission (ISM). While India had set up Semiconductor Complex Ltd in 1983, before Taiwan or China had any fabs, and Indian talent contributed to the chip design industry, SCL was destroyed in a fire in 1989. It was rebuilt in 1998, but India lost the plot.

Till the 2021 policy, India did not have a good road map for the industry. It aims to become one of the Top 5 global semiconductor ecosystems by 2030. “India will be among the Top 5 countries for semiconductor manufacturing within the next five years,” Union Minister for Electronics & Information Technology (MeitY) Ashwini Vaishnaw had said.