Lok Sabha Question No. 2375 (UNSTARRED), answered on 2022-12-21
Subject: Global shortage of Chip and Semi-conductor
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Subrata Pathak, Shrirang Appa Barne, Manoj Kumar Tiwari, Lavu Sri Krishna Devarayalu, Sambhajirao Mane Dhairyasheel, Sanjay Sadashivrao Mandlik, Prataprao  Jadhav, Bidyut Baran Mahato, Sudheer Gupta

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA

## UNSTARRED QUESTION No. 2375

TO BE ANSWERED ON: 21.12.2022

## GLOBAL SHORTAGE OF CHIP AND SEMI-CONDUCTOR

2375.  SHRI SUBRAT PATHAK: SHRI SHRIRANG APPA BARNE: SHRI MANOJ TIWARI: SHRI LAVU SRI KRISHNA DEVARAYALU: SHRI DHAIRYASHEEL SAMBHAJIRAO MANE: SHRI SANJAY SADASHIVRAO MANDLIK: SHRI PRATAPRAO JADHAV: SHRI BIDYUT BARAN MAHATO: SHRI SUDHEER GUPTA:

Will the Minister of ELECTRONICS AND INFORMATION TECHNOLOGY be pleased to state:

(a) whether the Government has conducted any analysis or prepared a report on the global chip and semi-conductor shortage and its impact, if so, the details thereof;

(b)  the  details  of  the  companies  that  have  such  cutting  edge  technology  along  with  the countries of their origin;

(c) whether the Government has invited such foreign companies to start production of Micro chips and semi-conductor in the country;

(d) if so, the details thereof along with the outcome thereto; and

(e)  the  steps  taken/being  taken  by  the  Government  to  ensure  adequate  availability  of chips/semi-conductor in the country?

## ANSWER

## MINISTER OF STATE FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI RAJEEV CHANDRASEKHAR)

(a):  The  chip  shortage  has  impacted  many  industries  worldwide  with  auto  and  consumer electronics  industries  among  the  most  affected  sectors.  The  disruptions  in  semiconductor supply chain first emerged after the Covid-19 pandemic, due to lockdowns and restrictions globally. The supply side problem has since transformed in to a demand side problem. Post covid,  there  has  been  significant  acceleration  in  digitization  of  economies  and  enterprises globally. Despite increase in chip production globally, this demand increase has outpaced the supply growth. Government conducted multiple discussions on this topic with OEMs, ODMs, Tier  1  companies  as  well  as  distributors  to  mitigate  the  problem  since  most  of  the  world depend on global semiconductor supply chain, dominated by few companies. It is expected that the supply chain will address the demand of digital products and services.

(b):    Semiconductor  ecosystem  is  highly  technology  intensive,  complex  and  is  driven  by cutting edge innovation that also require significant capital investment and R&D investment and  is  characterized  by  rapid  changes  in  technology.  Globally,  few  companies  such  as Taiwan Semiconductor Manufacturing Company Limited, Taiwan; Intel Corporation, USA; Samsung, South Korea have cutting edge technology for semiconductor wafer manufacturing and few companies such as Qualcomm, AMD, USA, Nvidia, Broadcom lead the design space in semiconductors.

(c) and (d):  Government is very focused on its important objective of building the overall semiconductor  ecosystem  and  ensure  that,  it  in-turn  catalyses  India's  rapidly  expanding electronics manufacturing and innovation ecosystem. Government has approved the Semicon

India  programme  with  a  total outlay of INR  76,000  crore  for  the  development  of semiconductor  and  display  manufacturing  ecosystem  in  the  country.  The  programme  has further  been  modified  in  view  of  the  aggressive  incentives  offered  by  countries  already having established semiconductor ecosystem and limited number of companies owning the advanced  node  /  cutting  edge  technologies.  Following  four  schemes  have  been  introduced under the aforesaid programme:

- i. ' Modified Scheme for setting up of Semiconductor Fabs in India '  for  attracting large  investments  for  setting  up  semiconductor  wafer  fabrication  facilities  in  the country  to  strengthen  the  electronics  manufacturing  ecosystem  and  help  establish  a trusted value chain. The Scheme extends a fiscal support of 50% of the project cost on pari-passu basis for setting up of Silicon CMOS based Semiconductor Fab in India.
- ii. ' Modified  Scheme  for  setting  up  of  Display  Fabs  in  India '  for  attracting  large investments for manufacturing TFT LCD or AMOLED based display panels in the country to strengthen the electronics manufacturing ecosystem. Scheme extends fiscal support of 50% of Project Cost on pari-passu basis for setting up of Display Fabs in India.
- iii. ' Modified  Scheme  for  setting  up  of  Compound  Semiconductors  /  Silicon Photonics  /  Sensors  Fab  /  Discrete  Semiconductors  Fab  and  Semiconductor Assembly,  Testing,  Marking  and  Packaging  (ATMP)  /  OSAT  facilities  in India' shall extends a fiscal support of 50% of the Capital Expenditure on Pari-passu basis for setting up of Compound Semiconductors / Silicon Photonics (SiPh) / Sensors (including  MEMS)  Fab/  Discrete  Semiconductor  Fab  and  Semiconductor  ATMP  / OSAT facilities in India.
- iv. 'Semicon  India  Future  Design:  Design  Linked  Incentive  (DLI)  Scheme' offers financial incentives, design infrastructure support across various stages of development and deployment of semiconductor design for Integrated Circuits (ICs), Chipsets,  System  on  Chips  (SoCs),  Systems  &  IP  Cores  and  semiconductor  linked design. The scheme provides 'Product Design Linked Incentive' of up to 50% of the eligible expenditure subject to a ceiling of ₹15 Crore per application and 'Deployment  Linked  Incentive'  of  6%  to  4%  of  net  sales  turnover  over  5  years subject to a ceiling of ₹30 Crore per application.

Government has reached out to foreign semiconductor companies and invited them to set up semiconductor  and  display  manufacturing  facilities  in  the  country.  As  a  result,  India Semiconductor  Mission,  a  Nodal  Agency  setup  for  implementation  of  the  programme  has received proposals under all schemes which are currently under consideration.

(e):    The  chip  shortage  has  exposed  vulnerabilities  in  the  semiconductor  supply  chain  and highlighted the need for increased domestic manufacturing capacity. Semicon  India programme  is  expected  to  surely  play  a  role  in  India's  semiconductor  chips  and  display requirements  in  the  medium  and  long  term.  The  programme  has  broader  objectives  of ensuring  a  globally  competitive  value  chain  that  is  based  in  India  but  supplies  electronics products, semiconductors and technology services and solutions to the world.

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