Date : 09/08/2023

Relevance: GS Paper 3- Semiconductor Industries

Keywords: CHIPS Act, India Semiconductor Mission, Chip2Startup, C-DAC

Context-

The Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (CHIPS Act) in the United States, which has completed its first year as law, offers valuable lessons for India's semiconductor strategy. As industrial policies become increasingly significant for nation-states, the CHIPS Act exemplifies the essential capabilities and structures required for successful implementation.

Four crucial lessons for India to enhance its semiconductor strategy, drawing insights from the CHIPS Act.

Coordinated Government Efforts and Multi-Agency Approach:

• The CHIPS Act demonstrates the effectiveness of collaboration among various government entities. It establishes distinct funds, including the CHIPS for America Fund, which receives $50 billion from the Department of Commerce, along with allocations of $2 billion for Defense, $0.5 billion for State, and $0.2 billion for the National Science Foundation to promote the growth of the semiconductor workforce. This structure highlights the priority accorded to semiconductors.
• In India, the manufacturing, assembly, displays, and compound semiconductors schemes have been assigned to an independent division called India Semiconductor Mission (ISM) within a non-profit company set up by MeitY. The policy for chip design is being administered by C-DAC, an R&D organization again under the MeitY. The ISM Committee comprises largely MeitY bureaucrats. While the committee is a good beginning, ensuring that the semiconductor strategy survives beyond government terms requires a whole-of-government approach along the lines of the CHIPS Act.
• India's semiconductor policy, primarily overseen by the Ministry of Electronics and Information Technology (MeitY), could benefit from a comprehensive approach similar to the CHIPS Act. By integrating efforts across different government departments, India can prioritize and execute its semiconductor strategy more efficiently.

Workforce Development and Collaborative Initiatives:

• Under the CHIPS Act, companies seeking funding are required to submit workforce development plans. Establishing the National Semiconductor Technology Center (NSTC) facilitates collaboration between industry and educational institutions.
• A competent semiconductor engineering workforce is India’s quickest route to gaining leverage in the semiconductor industry. In India, the Chips2 Startup (C2S) program, in partnership with over 100 universities and colleges, seeks to scale up workforce expansion by supporting existing quality training programs. To further enhance workforce skills, C2S should emphasize certifying quality training programs offered by universities and private training institutes. Because in the Indian case, however, many private training centers prepare chip designers outside the conventional university system.

Enhancing Accountability and Transparency:

• The CHIPS Act introduces the CHIPS Program Office (CPO) responsible for assessing project financial viability and attracting private sector investments. Similarly, India needs to enhance transparency by publishing regular monthly progress reports on its semiconductor program. Transparent reporting not only manages expectations but also instills confidence in India's semiconductor plans, fostering stakeholder trust.

Investing in Future Research and Innovation:

• The CHIPS Act allocates substantial funding for future research, including $11 billion focused on advanced technologies. Hence, it envisages a National Advanced Packaging Manufacturing Program (NAPMP) to help the U.S. gain a disproportionate competitive advantage in the future. Packaging was considered a labor-intensive and low-margin component of the supply chain only a few years ago. However, as downscaling transistors becomes difficult, researchers have zoomed in on advanced packaging techniques that combine multiple semiconductors in a multi-dimensional arrangement on a single substrate, all in one package.
• While high-volume chip manufacturing may not be India's current focus, the CHIPS Act underscores the need to identify and invest in research on future technologies. India's semiconductor strategy should align with this approach, channeling resources into research areas with high growth potential.

Conclusion:

The CHIPS Act serves as a valuable template for effective industrial policy in the semiconductor sector. By closely examining the administrative framework of the Act, India's semiconductor strategists can draw inspiration to refine their approach. Coordinated government efforts, workforce development, accountability, transparency, and future research are key components that India should adopt to strengthen its semiconductor strategy. By implementing these lessons, India can ensure the continuity and success of its semiconductor policy, contributing to its technological advancement and global competitiveness.

Source -The Hindu