Foxconn-Vedanta deal collapse; disappointed Indians trace Indian semicon history
The quest for semiconductor dominance in today's world can be likened to the race for oil in the 1970s. Every country is vying to excel in semiconductor fabrication, and this is not a sudden development. For years, many capable nations have been competing for dominance in this field, but the struggle has intensified in the post-Covid era. The increased demand for electronic goods and disruptions in global supply chains have made it even more critical for countries to establish a strong semiconductor fabrication ecosystem. India, like other nations, has recognized the vulnerability of the market and has taken steps to build its own robust fabrication industry.
Actually, India, with its immense and youthful labor force, is highly suitable for becoming the hub of semiconductor production. Furthermore, the present administration is leading India in the right direction. However, it appears that India still has a considerable distance to cover in order to become one of the foremost countries in semiconductor manufacturing.
The major alliance between Taiwan's Foxconn and Indian conglomerate Vedanta to build a FAB plant in India has fallen apart. It seems that both companies did not possess the necessary Fab technology, so they explored the option of finding a potential partner from Europe. Unfortunately, this endeavor was unsuccessful and resulted in the dissolution of their joint venture.
Nevertheless, both corporations have explicitly stated that they will operate independently in India. Foxconn has also made it known that they do not plan on departing from India, but instead, they intend to broaden their range of partners. However, it is widely acknowledged that India's desire for semicon fabrication has suffered a significant blow. Consequently, various reactions have emerged from individuals throughout the country. One individual, going by the username "STAR Boy" on Twitter, penned a thread discussing India's semiconductor journey since the 1960s.
India's Journey in the Semiconductor Industry (Explanation) In this blog post, we will explore the incredible advancement of India in the semiconductor field.
India failed to capitalize on the semiconductor opportunity in 1987 due to an ineffective government and as a result, it currently lags behind by 12 generations in the global semiconductor competition.
India was granted chances repeatedly, yet India consistently ended up on the losing side.
Check out this gripping tale right here
In a tweet, he stated, "Back in 1987, India failed to seize the opportunities in the semiconductor industry because of a poorly performing government. As a result, India is now lagging behind by 12 generations in the global race for semiconductors." In his series of tweets, he goes on to detail the significant events that unfolded in the semiconductor sector over the past decades. Now, let's delve into this historical journey.
The History Of Semiconductors In India
In 1958, a group of eight individuals, who came to be known as the "traitorous eight," founded Fairchild Semiconductor. This was during a time when Integrated Circuits (IC) were newly invented. Fairchild Semiconductor was looking to establish its first semiconductor plant in India. Nevertheless, the stringent regulations, bureaucratic inefficiency, and a focus on producing low-quality products hindered their plans, leading them to ultimately choose Malaysia as the location for their plant. Later, in 1962, India established Bharat Electronic Limited (BEL) in order to manufacture electronic components, including semiconductors, within the country. BEL began producing silicon and germanium transistors. Unfortunately, this division had to be shut down as BEL was unable to compete with global standards.
In the mid-1980s, BEL collaborated with IISc professor A.R. Vasudeva Murthy to create Metkem Silicon Limited. However, the government's lack of support and their unfulfilled commitment to financial aid once again dashed their grand ambitions. In the 1990s, another determined individual named E.S Ramamurthy attempted to advance silicon production with BHEL, yet unfortunately experienced a similar outcome.
The Indian government took a significant step in 1964 by creating the Electronic Commission with the aim of advancing India's electronic industry and manufacturing capabilities. Subsequently, in the late 1970s, the government of India introduced the Technology Policy Statement with the objective of encouraging the growth of domestic technology, specifically in the field of semiconductors.
The Indian Semiconductor Dream's Major Setback
In 1983, the Indian government created the Semiconductor Complex Ltd. (SCL) in Mohali, Punjab to manufacture top-notch semiconductor goods for the Indian market. This was a major milestone for SCL as it also emphasized the production of microprocessors. Up until the late 1980s, SCL achieved impressive advancements, transitioning from a 5-micron process technology to a 0.8-micron process. Unfortunately, like many other industries, SCL also experienced the negative impacts of the US-Japan trade conflict of the 1980s, which bears a resemblance to the current tensions between the US and China.
The market began to recover after about a year, but 1989 brought the largest obstacle for India's semiconductor aspirations, causing the country to regress by decades. In that year, a major fire engulfed the SCL, destroying the entire facility. Surprisingly, during this period, India had state-of-the-art semiconductor technology, surpassing even current players like China and Taiwan, who hadn't even considered entering the manufacturing field.
In order to deal with the tragedy, the government set up the Centre for Electronics Design and Technology in Mohali in 1990. This was a highly devastating event with significant consequences. By the beginning of the 2000s, semiconductors had become a $200 billion industry, but India had a very small portion of this market. The design and structure of these products were primarily based in the United States, while manufacturing was concentrated in Eastern Asia.
The 2005 Predicament
In the middle of 2005, a multinational corporation (MNC) began its operations in the southern region of India and set up a specialized facility called a "class 100 clean room" to ensure the purity of semiconductors. However, once again, the company faced significant obstacles due to policies and regulations. The imported machinery remained stuck at the port for several months, and to make matters worse, the company not only faced difficulties obtaining concessions but also had to pay high import duties on the equipment. Despite engaging in discussions with the government, the company eventually made the decision to relocate outside of India. Surprisingly, China eagerly took advantage of this opportunity. Witnessing this unfortunate situation, another MNC decided to abandon its plans to invest in India.
India introduced its inaugural semiconductor policy in 2006 during the tenure of the Manmohan Singh government and extended an invitation for investment in 2011. However, previous occurrences discouraged multinational corporations from making substantial investments. The circumstances began to shift after 2014 and particularly following the occurrence of the pandemic, as mentioned earlier. Presently, numerous major players in the business realm are actively seeking opportunities to invest in India.
India has already established a system for assembling products, and now it aims to broaden its reach in manufacturing through foreign investments and technology exchange.
