Chips need minerals, too

India has taken significant strides in becoming a global semiconductor power house, with the recent announcement of four major semiconductor manufacturing units in the states of Andhra Pradesh, Odisha and Punjab, bringing in an investment of Rs 4,600 crores. With these additions, the total number of manufacturing facilities established under India’s Semiconductor Mission has reached 10, with a cumulative investment of a staggering Rs 1.6 lakh crores.

- AMIT KAPOOR AND KARTIK

The growth numbers in India’s semiconductor landscape tell an inspiring story. From Micron's Rs. 22,516 crore facility in Gujarat to Tata Electronics’ massive Rs. 91,000 crore partnership with Taiwan’s PSMC, India's semiconductor ecosystem is rapidly taking shape. The latest addition, HCL-Foxconn’s Rs. 3,700 crore joint venture in Uttar Pradesh’s Jewar, promises to produce 20,000 wafers monthly.

These achievements are highly impressive, given India’s ambition to capture a market of $110 billion by 2030, approximately 10 per cent of the global market. While we celebrate these manufacturing milestones, a critical vulnerability remains overlooked: the supply of Rare Earth Elements (REE). Without securing a sustained supply of REE, India’s impressive growth in the global chip manufacturing industry could significantly derail.

Rare Earth Elements, found in the earth’s crust, are incredibly essential to produce semiconductors. Most significant of them all is silicon, with China controlling 80 per cent of the raw silicon production in the world. In addition to silicon, other elements such as gallium, germanium, dysprosium and terbium are highly essential to produce semiconductors. China controls over 70 per cent of the total rare earth elements combined, making it anear monopoly in the sector.