Why Semiconductor India's Future is at Risk Despite Its Promising Start
Semiconductors are the building blocks of modern technology, powering everything from smartphones to medical equipment. But what exactly are they and why are they so important?
Semiconductors can be found in thousands of products such as computers, smartphones, appliances, gaming hardware, and medical equipment. By employing materials such as silicon (Si), gallium arsenide (GaAs), and germanium (Ge), electronics manufacturers were able to replace traditional thermionic devices that made electronic items heavy and non-portable. Since the invention of semiconductor elements, there has been a high degree of miniaturization, resulting in more compact and transportable electronic equipment.
Silicon is often regarded as the best semiconductor element available in the present market. Along with other countries like the U.S., India has been looking to forge strategic alliances around semiconductors. It is a critical technology that goes into many of the devices we use from smartphones to refrigerators. Taiwan and South Korea make up about 80% of the global foundry market i.e, manufacture chips that other companies design.
India's Foray In Semiconductor
According to government data, India imports 94 percent of its electronics and 100 percent of its semiconductors. Digital India initiatives seek to fulfill all three parameters with a sense of urgency. The good news is that India is trying to lay a strong foundation of chip design that can be expanded to research and development focus for product development and IP (intellectual property) creation.
In December 2021, India announced its roughly $10 billion dollar production-linked incentive (PLI) scheme to encourage semiconductor and display manufacturing in the country. Vedanta and Taiwanese chipmaker Foxconn have signed an MoU to set up a ₹1,54,000 crore semiconductor plant in Gujarat. Two other projects have also been announced — a $3 billion plant in Karnataka by the International consortium ISMC and a $3.5 billion plant in Tamil Nadu by Singapore’s IGSS Ventures.
Renowned Indian Institutions are also taking initiatives to provide extensive knowledge in this field. The Indian Institute of Technology, Hyderabad (IIT-H), will soon start offering an undergraduate course in very-large-scale integration (VLSI) design and technology, the first of its kind program in the country that will help create a pool of semiconductor engineers and technical talent.
Issues With Semiconductor
That being said, huge opportunities are often followed by great challenges and higher consequences. Semiconductor Industry carries a significant risk of exposure to water and waste management. Manufacturing semiconductors requires large volumes of ultra-pure water. Since water is becoming an even scarcer resource around the globe, robust management of water usage is key to avoiding higher supply costs and the potential loss of access to water-scarce areas, which could cause production disruptions and affect revenue. Chip-making also requires gallons of ultrapure water in a single day, which experts say could be a task for the government to provide to factories, compounded also by the drought conditions which often prevail in large parts of the country. Besides, an uninterrupted supply of power is central to the process, with just seconds of fluctuations or spikes causing millions in losses. Another task for the government is to drive up consumer demand in the semiconductor industry to not end up in a situation where these ventures remain successful only till taxpayers are forced to fund required subsidies.
Companies have for years focused on their water usage and waste management to achieve Net Zero. More recently, some set net-zero goals after pressure from Big Tech partners. Qualcomm Inc. and Intel Corp. have taken different approaches in being early adopters of net-zero goals. Qualcomm set a target of net-zero greenhouse gas emissions across Scopes 1, 2 and 3 by 2040. Whereas Intel’s facilities in the U.S., Europe, Israel and Malaysia operating on 100% renewable energy in 2021, and they achieved 80% renewable electricity globally. They are also trying to bring a circular economy in the Semiconductor Industry driven by a combination of environmental, regulatory, and competitive pressures. It focuses on doing business by embracing reuse, repair, and recycling strategies.
Semiconductors play a fundamental role in the development of green technologies. They harness, convert, transfer and store renewable energy as electricity and subsequently move it onto the electric grid with minimal loss of power. Semiconductors also enable responsive and efficient use of electricity through IoT technology, ensuring supply is matched to demand and current is well-distributed. Both solar panel systems and wind turbines are highly dependent on semiconductor technology. They are also necessary for producing electric vehicles (EVs) and charging stations. Reducing emissions through clean energy usage and energy conservation projects is imperative to make the industry more sustainable. Decarbonization efforts will increase the usage of renewable energy and electric vehicles around the world, driving demand for chips. The number of power semiconductors used in the global renewable energy market is expected to grow with a compound annual growth rate (CAGR) of 8% to 10% from now to 2027.
Even though these opportunities and risks come hand in hand, we have to make sure the balance is necessary to make it sustainable. While it gives jobs, it is in the industry’s best interest to spend money training a skilled workforce and providing a safer environment. They should work towards 100% ISO 14001, 50001, and 90001 certifications across facilities. While it gives India a self-reliant push, let's be wary of proper disposal techniques of the waste it produces that not only extends to the facilities but also through the entire supply chain from the mining of silicon to sourcing of water. A comprehensive tool such as WRI’s Aqueduct is needed to assess the needs.
After all, a safer environment and a healthy workforce will lead to longevity of not just the environment & life but also the industry.