Lok Sabha Question No. 4409 (UNSTARRED), answered on 2022-03-30
Subject: Semiconductor Shortage
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Sangamlal Kadedin Gupta, Jagdambika Pal, Brijbhushan Sharan Singh, Rajbahadur Singh, Pratap Chandra Sarangi, P.P. Chaudhary, Mahendra Singh Solanky, Rajendra Agrawal, Srinivas Kesineni

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO. 4409

TO BE ANSWERED ON: 30.03.2022

## SEMICONDUCTOR  SHORTAGE

4409. SHRI SANGAM LAL GUPTA:

SHRI JAGDAMBIKA PAL:

SHRI BRIJBHUSHAN SHARAN SINGH:    SHRI RAJBAHADUR SINGH:

SHRI PRATAP CHANDRA SARANGI:

SHRI P.P. CHAUDHARY:

SHRI MAHENDRA SINGH SOLANKY:

SHRI RAJENDRA AGRAWAL:

SHRI KESINENI SRINIVAS:

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

- (a)  whether  the  Government  has  undertaken  any  surveys  or  studies  to  evaluate  the  impact  of semiconductor chip shortage in the country and its consequences on the Indian industry if so, the details thereof and if not, the reasons therefor;
- (b) whether the Government is taking any short-term measures to offset the shortage of semiconductor chips for the Indian industry and if so, the details thereof;
- (c)  whether  the  Government  has  negotiated and concluded deals with international chip fabricators to help Indian manufacturers and if so, the details thereof; and
- (d)    the  details  of  the  current  semiconductor  chip  fabrication  capacity  and  value  of  the  output  in  our country along with the measures being taken to augment the same?

## ANSWER

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

- (a) : The semiconductor chip shortage has impacted many industries worldwide with auto and electronics industries among the most affected sectors. The shortage first emerged after the Covid-19 pandemic, due to lockdowns and restrictions. The supply side problem has transformed into a demand side problem as economies  started  recovering  which  increased  the  consumption  of  electronic  products  across  various segments. Some key reasons behind the global chip shortage are supply chain disruptions, geographic concentration of electronic manufacturing, rise in demand for digital and electronic products and digital adoption across the world.

Semiconductors are essential to virtually all sectors of the economy- including aerospace, automobiles, communications, clean energy, information technology and medical devices. Demand for these critical components has outstripped supply, creating a global chip shortage and resulting in lost growth and jobs in  the  economy.  The  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.

Government  has  conducted  multiple  discussions  on  chip  shortage  with  global  OEMs,  ODMs,  Tier  1 companies as well as distributors to mitigate the problem of chip shortage.

- (b) :  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. Further, the vision of Atmanirbhar Bharat in electronics & semiconductors was given further momentum by the Union Cabinet, chaired by the Hon'ble Prime Minister, approving the Semicon India programme with a total outlay of INR 76,000 crore for the development of semiconductor and display manufacturing ecosystem in our country. The programme aims to provide financial support to companies investing in semiconductors, display manufacturing and design ecosystem. This will serve to pave the way for India's growing presence in the global electronics value chains.

Following four schemes have been introduced under the aforesaid programme:

- i.      Scheme  for  setting  up  of  Semiconductor  Fabs  in  India provides  fiscal  support  to  eligible applicants for setting up of Semiconductor Fabs which is aimed at attracting large investments for setting  up  semiconductor  wafer  fabrication  facilities  in  the  country.  Following  fiscal  support  has been approved under the scheme:
2.  28nm or Lower - Up to 50% of the Project Cost
3.  Above 28 nm to 45nm - Up to 40% of the Project Cost
4.  Above 45 nm to 65nm - Up to 30% of the Project Cost
- ii.     Scheme for setting up of Display Fabs in India provides fiscal support to eligible applicants for setting up of Display Fabs which is aimed at attracting large investments for setting up TFT LCD / AMOLED based display fabrication facilities in the country. The Scheme provides fiscal support of up to 50% of Project Cost subject to a ceiling of INR 12,000 crore per Fab.
- iii.      Scheme  for  setting  up  of  Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor  Assembly,  Testing,  Marking  and  Packaging  (ATMP)  /  OSAT  facilities  in India: The  Scheme  provides  a  fiscal  support  of  30%  of  the  Capital  Expenditure  to  the  eligible applicants  for  setting  up  of  Compound  Semiconductors  /  Silicon  Photonics  (SiPh)  /  Sensors (including MEMS) Fab and Semiconductor ATMP / OSAT facilities in India.
- iv.    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.

In  addition  to  the  above  schemes,  Government  has  also  approved  modernisation  of  Semi-Conductor Laboratory, Mohali as a brownfield Fab.

(c): Government of India is continuously encouraging investments by Global Semiconductor companies for  setting  up  of  Semiconductor  Fab  units  in  India  directly  or  through  joint  venture  with  Indian manufacturers.  Setting  up  of  Semiconductor  unit  requires  huge  investments  and  necessitates  suitable infrastructure like availability of uninterrupted Power and Clean Water. Global companies are evaluating the possibility to set up facilities in India.

Under  Semicon India Programme,  Government  has  received 3 applications for setting up of Semiconductor Fab units in the country. The applications are under examination by India Semiconductor Mission (ISM).

(d): Semiconductor FABs are highly capital intensive and resource intensive, and are at the cutting edge of  manufacturing  with  rapidly  changing  technology  cycles.  Further,  the  semiconductor  fabrication capability for leading / cutting edge technology nodes is available with only few companies globally.

Semiconductor  wafer  fabrication  facilities  are  available  in  India  in  limited  capacities  for  strategic applications  at  Semi-Conductor  Laboratory  (SCL)  Mohali,  Gallium  Arsenide  Enabling  Technology Centre  (GAETEC),  Hyderabad  and  Society  for  Integrated  Circuit  Technology  and  Applied  Research (SITAR),  Bengaluru.  Government  has  also  approved  modernisation  of  Semi-Conductor  Laboratory, Mohali as a brownfield Fab.