1/6/2021 Setting up a fab in India.

The recent curbs on Huawei by US shows… | by Amol Sarin | Jan, 2021 | Medium

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Setting up a fab in India

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The recent curbs on Huawei by US shows how technology has become a critical element
in geopolitics. As the world becomes more dependent on tech , countries need to think

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strategically to safeguard their semiconductor supply chains, the building blocks of

technology.

Setting the context

Worldwide, semiconductor manufacturing has consolidated over the years. Today,

Taiwan’s TSMC is the only pure-play foundry in business. Samsung is the other contract
manufacturer, but it is an Integrated Device Manufacturer (IDM) as well. Currently, only
TSMC and Samsung have moved to the below 10nm nodes commercially.

The materials and chemicals for the fab are concentrated with Japanese players (like
Tokyo Electron) while for lithography there is only one company worldwide which
makes EUV systems costing around $200Mn — Dutch owned ASML.

The process to move the process to lower nodes has become so specialized that very few
companies are able to make it. A lower node fab (less than 10nm) takes upwards of
$12Bn of investment. Still, even with massive investments, making semiconductors at
lower nodes is not everybody’s cup of tea —

India has the ISRO-owned Semi Conductor Lab (SCL) in Chandigarh with a 200mm size
silicon wafer handling capability and 180nm technology node. This fab is still now
outdated for analog RF chips.

If India has to play a leading role in 21st century, she has to take control of her
semiconductor ecosystem and needs to focus on ways to build manufacturing
competence.

Indian market has a huge demand for electronics. Over the last 5 years (till 2019), India
has seen growth in production from $29Bn to $70Bn in electronics manufacturing. Our
imports have also growth at a CAGR of 11% to $57Bn. A high import growth shows that
electronics components & chipsets are still being imported. To kickstart the local
electronics manufacturing along with setting up of a fab for chipsets, the government
has come up with National Policy on Electronics in June 2020. The policy has 3 key
elements:

— Production Linked Incentive(PLI): To create large scale manufacturing units primarily

for mobile phones and electronics components.
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— Scheme for promotion of manufacturing of electronic components and semiconductors

(SPECS): This scheme focuses on helping companies Assembly, Testing, Marking or
Packaging (ATMP) units to set up here
— Modified electronics manufacturing clusters (EMC 2.0): The modified scheme aims to
create clusters where a few big players come together to work on a common technology.
This is possible in the world of semiconductors.

Strategy moving forward

Start with analog chipsets

Foundry Market till 2025

From the graph above, one can clearly see that there will be significant demand of
higher nodes well into 2025. Lower nodes of 3 digits (130nm/180nm) are not
technically high end and yet demand for these ICs will be more than $25Bn worldwide
by 2025. Analog/RF chipsets typically require these nodes — with demand for 5G, one
would require more analog and RF chipsets both in handsets and base stations.

India should start small and focus on these nodes (130nm/180nm going upto 65nm at
the maximum). These require lower investments and would be great stepping stones to
move to advanced nodes.

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Get foreign players for advanced nodes. Give preferential market access
(PMA) to Samsung

Top Global Foundries

The above chart shows the top global foundry players worldwide. Indian government
enjoys good relations with majority of them — TSMC and UMC are Taiwanese, Samsung
is Korean, Globalfoundry is UAE based with fabs in US, TowerJazz is Israeli. Only with
the exception of SMIC which is Chinese, all other players are from countries where
Indian government enjoys good rapport. We should use these relations to encourage
these players to setup a fab in India. The PLI scheme and EMC2.0 schemes should be
fully exploited to encourage these players to setup a shop in India.

TSMC and Samsung are too invested in developing nodes lower than 7nm. We can talk
to other players to set up nodes till 28nm. For this, we should be open to buying old used
equipment used by foundries who have moved to higher nodes.

Use India’s demand to get fabs in India

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Mobile market (https://www.counterpointresearch.com/india-smartphone-share/)

India has a burgeoning mobile market. It is the largest segment in electronics as well.
Looking at the top mobile players, we see clearly that majority are Chinese players. We
should have a policy tied in to PLI scheme where government gives sops to mobile sets
which have local manufactured chipsets in them. Local fab may need 3–4 years to come
up. To get around this Arun Mampazhy explains in his Swarajya article, the idea of
‘virtual fabs’. Basically, start with an MoU with a foundry player with commitment to
open a fab, and start routing chips through the Indian subsidiary.

III-V Fab and R&D Fabs for prototyping

A III-V fab which caters to defence and space sectors at an investment of upto $1Bn. A
III-V fab uses Gallium Arsenide (GaN) or Indium Arsenide (InAs) or combinations from
the III and V groups of the periodic table instead of silicon wafers as starting point. Since
these materials can withstand extremely low temperatures, they are great for space
applications and high power defence applications.

Along with a III-V fab, India needs a common R&D fab which can come up with an
investment of $0.3Bn. We can pool in our research institutes, IISc and IITs for this
initiative.

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Startups which are making cost effective solutions will need services of these fabs
wherein the existing material will be changed.

India has an established design ecosystem in the country. The physical design of these
design houses are then sent to foundries outside for the actual product. These design
houses can send their designs to the R&D fabs for the final chip fabrication. A good
product can also lead to commercial production in the country as well.

These fabs can be used for academic level tape-outs as well. It is here that India can also
explore a MOSIS type of service as well. This service can support Multi Project Wafer
(MPW) technology, access to foundries, which is great of low volume production.

India should embark on an ambitious plan to set up a running fab by next elections i.e.
2024. That will be a real feather in government’s cap and will be the real Atmanirbhar
program for India.

Taken many inputs from Arun Mampazhy’s writing in various media.

Semiconductors Fab Chipset

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