As the United States doubles down on semiconductor self-reliance, what lessons of ‘Aatmanirbharta’ can India draw from the Chips Act? Sanjay Kumar, former senior director in the US Chips and Sciences Programme, shares his views with EFY’s Yashasvini Razdan.
Q. You have been at the centre of a public-private partnership ecosystem. How does this partnership advance semiconductor goals, and what is its impact on the US and globally?
A. You see, public-private partnerships operate at multiple levels. At one level, companies like Taiwan Semiconductor Manufacturing Company (TSMC), Intel, GlobalFoundries, or Samsung seek to expand their manufacturing capabilities. These companies typically contribute about 70 per cent of the required investment, while the government supports them with 10 to 15 per cent through grants. The $52 billion Chips and Science Act is a grant programme with no equity involved, but the US Treasury provides an additional investment tax credit of up to 25 per cent.
At a more advanced level, we facilitate private investment by connecting qualified applicants with other funding sources. For example, when we identify good-quality applications that we cannot fund directly, we provide the list to private investment companies or other investors for evaluation, ensuring these projects have access to alternative resources.
So, the public-private partnership model allows private companies and governments to share investment responsibilities, ensuring robust semiconductor development while fostering innovation and growth.
Q. Can you share some successes you witnessed while driving these large semiconductor investment projects in the US?
A. In terms of successes, the programme has attracted approximately $400 billion in foreign direct investment (FDI), doubled the leading-edge node capacity, and significantly increased capacity for current and mature node technologies. It has also facilitated the development of three or four advanced packaging facilities, transitioning from 2D to 3D packaging capabilities within the US.
For the first time in nearly 30 years, we are building wafer fabs domestically. In addition, advanced substrate manufacturing, which has never been done in the US before, is now being established. I had the privilege of leading the deal that brought this capability onshore.
Q. What are the challenges that come with these large semiconductor investments?
A. The funding is finite and is not a one-shot solution to fully relocate the supply chains. You see, the semiconductor ecosystem is incredibly complex, requiring a vast array of components and processes—from manufacturing tools, chemicals, and gases to adhesives, discrete components, and beyond.
The programme provides critical momentum, but it cannot address all aspects of semiconductor manufacturing and supply chains. This created a unique set of questions, as prioritising where to allocate limited resources is essential to achieving maximum impact.
Q. Does India have any natural advantages in semiconductor manufacturing?
A. Semiconductor manufacturing involves significant capital expenditure (CapEx) and operational expenditure (OpEx). Emerging economies like India hold an inherent advantage in OpEx due to lower labour costs. Another critical component is energy. Reliable and affordable power is essential for semiconductor fabs and data centres.
Moreover, India has vast dry lands in states like Rajasthan and Gujarat, making it well-suited for large-scale solar energy projects. India can build energy infrastructure as a competitive differentiator, adopting a strategy similar to that of China or the Middle East, thus providing sustainable and cost-effective power for its semiconductor industry.
Q. What do you think should be India’s immediate focus in semiconductor manufacturing?
A. The immediate focus lies in established technologies such as 22-nanometre, 28-nanometre, and 40-nanometre nodes, along with compound semiconductors. These areas provide achievable wins in the near term. However, advanced nodes like 3-nanometre and 2-nanometre remain challenging for India and other emerging economies due to their complexity and the significant investments required.
One innovative approach could involve collaborating with companies that possess cutting-edge yet underdeveloped technologies. For example, IBM has developed a 2-nanometre process that is not production-ready. India could consider licensing such technologies and building them from the ground up through direct capital injections and long-term investments.
Additionally, India can provide packaging capacity. Complement US efforts by installing chemicals, connectors, discretes, PCBs and substrates capacity, which are all sophisticated products. This will create momentum, build an ecosystem in India around which other downstream businesses, such as materials, can be located.
Q. What opportunities exist for India in electronic design automation (EDA)?
A. The EDA sector is currently dominated by companies like Synopsys, Cadence, and Mentor. However, advancements in artificial intelligence are reshaping this space. AI-driven tools can streamline semiconductor design processes, opening opportunities for new players. With advances in AI and the advent of artificial general intelligence (AGI), it will probably be possible for a handful of capable engineers to disrupt this space without requiring a large investment
India has a chance to leapfrog in EDA, similar to how it bypassed landline infrastructure in favour of mobile technology. By supporting and nurturing EDA companies that use AI in semiconductor design, India can create a new wave of innovation in the industry.
Q. What other strategies can emerging economies employ to establish a robust semiconductor ecosystem beyond established playbooks?
A. Partnering with industry leaders such as TSMC and GlobalFoundries is a valid strategy for emerging economies, but the country must also think disruptively.
For instance, ASML currently monopolises the production of extreme ultraviolet (EUV) lithography machines. However, alternative technologies like particle accelerator-based EUV systems are being explored. Emerging economies could support and incubate such initiatives to establish themselves eventually as global leaders in niche areas, effectively creating the “next ASML.”
As the industry transitions from silicon-based computing to quantum technologies, India could focus on early investments in quantum computing, quantum networking, and related areas. Countries like Australia and some European nations have already invested hundreds of millions of dollars in these technologies. I hope India can take a similar approach to ensure it remains competitive as the landscape evolves and be able to participate in next-generation computing technologies.
