Govt to spend $1.2 billion on modernising semiconductor lab in Mohali

Action is part of govt's $10 bn Semiconductor Mission of 2021; Centre sees chip market in India growing at 22% CAGR, reaching Rs 9 trillion or 10% of global market by 2030

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The government will spend around $1.2 billion to modernise the Semi-conductor Laboratory (SCL) in Mohali, a 30-year-old facility currently capable of producing 8-inch CMOS microchip wafers mostly used for the country’s strategic needs such as the space programme.

The planned modernisation and commercialisation of the facility is a part of the government’s $10 billion India Semiconductor Mission announced in 2021. The Union Cabinet approved the modernisation plan in July 2022, which includes an exploration of the possibility of the Joint Venture (JV) of the Semi-Conductor Laboratory (SCL) with one or more commercial fab partners. However, the government has not provided a projected timeline for the project.

According to a request for proposal floated by the Ministry of Electronics and Information Technology (MeitY), the planned upgrade aims to transform SCL into an entity with volume production and profitable assets. It also wants to extend SCL’s design, fabrication, testing and packaging capabilities to a wider range of semiconductor products and enhance competitiveness, improve quality and bring cost-effectiveness.

The fab, which started production in 1984 was devastated by a factory fire in 1989 and has not fully recovered the capacity thereafter. Nevertheless, it remains the only fab owned by the government and is credited for the creation of chips for crucial projects like Mangalyaan, the country’s Mars Orbiter Mission.

The minister, while speaking at SemiconIndia FutureDESIGN roadshow in Delhi said the fab will also lend itself to the ecosystem of research and prototyping capacities for semiconductors after the upgrade. He added that India Semiconductor Research Centre will soon be announced for “cutting-edge research” that will act as a hub in a spoke of academic institutions like IITs to create centres of excellence (CoE) in the campuses.

The government estimates the semiconductor market in India to grow at a compounded annual growth rate of 22 per cent and reach Rs 9 trillion or 10 per cent of the global market by 2030. from Rs 1.25 trillion in 2020.

“We are significantly increasing our electronics capabilities, both manufacturing, design, and innovation. In the next 10 years we want to achieve what China took 30 years to achieve in electronics and semiconductors,” Chandrasekhar said.

The Setting up of the Semiconductor unit requires huge investments and necessitates suitable infrastructure like the availability of uninterrupted Power and Clean Water. The complex technology-intensive sector needs huge capital investments, high risk, long gestation and payback periods, and rapid changes in technology which require significant and sustained investments.

The minister also informed that the government’s Semiconductor Design-Linked incentive scheme has so far onboarded 27 startups and the growth opportunity for startups in the sector was huge.

Representatives of some leading tech firms participated in the programme at IIT Delhi. Sequoia Capital, the venture capital firm announced its second investment of the year in an Indian semiconductor-focused startup. InCore Semiconductors, which is building RISC-V processor cores in India, has raised USD 3 million in a seed funding round from Sequoia Capital India.