Semiconductor Partnership with Singapore

Why in News?

The President of Singapore, during his recent visit to India, announced initiatives to explore semiconductor manufacturing and ecosystem development in India. These initiatives aim to strengthen bilateral cooperation and create next-generation technological solutions, enhancing India’s semiconductor capabilities and global competitiveness.

Introduction

Semiconductors are the backbone of modern electronics, powering everything from smartphones to defense systems. With the global semiconductor market projected to reach a trillion dollars by 2030, countries worldwide are vying for leadership in this sector. India, despite being a significant consumer of semiconductors, relies heavily on imports. Collaborating with Singapore, a leader in semiconductor manufacturing, presents a transformative opportunity for India to develop its semiconductor ecosystem and reduce dependence on imports.

Singapore’s Semiconductor Landscape

• Economic Contribution:

  • The semiconductor sector contributes approximately 8% of Singapore’s GDP.
  • Singapore produces 10% of the world’s semiconductor output, including 5% of global wafer fabrication capacity and 20% of semiconductor equipment production.

• Global Semiconductor Presence:

  • Major global semiconductor firms operate in Singapore, covering the entire semiconductor value chain from integrated circuit (IC) design to wafer fabrication, assembly, and testing.
  • Singapore’s four wafer fabrication parks span 374 hectares and house state-of-the-art facilities.

• Challenges:

  • The industry specializes in mature-node chips (28nm and above) for sectors like automotive and consumer electronics.
  • It lags in high-end logic chips (7nm and below), crucial for AI and advanced computing.

India’s Semiconductor Industry

• Market Value:

  • India’s semiconductor market was valued at USD 26.3 billion in 2022 and is projected to grow to USD 271.9 billion by 2032.

• Import Dependence:

  • India imported USD 5.36 billion worth of semiconductors in 2022 while exporting only USD 0.52 billion.

• Positive Factors:

  1. Skilled Workforce:

     • India’s large pool of STEM graduates supports semiconductor manufacturing, R&D, and design.

  2. Cost Advantage:

     • Lower labor and operational costs provide a significant edge for semiconductor manufacturing.

  3. Global Supply Chain Diversification:

     • Geopolitical shifts away from China position India as an attractive destination for semiconductor investment.

• Foreign Partnerships:

  • MoUs and agreements with USA, Japan, and the European Commission strengthen India’s semiconductor aspirations.
  • The Tata Group’s collaboration with Powerchip Semiconductor (Taiwan) for a facility in Dholera, Gujarat is a notable development.

Key Government Initiatives

1. India Semiconductor Mission (ISM):

   • Aimed at building a robust semiconductor and display ecosystem.

2. Semiconductor Fab Scheme and Display Fab Scheme:

   • Provides incentives for establishing fabrication facilities.

3. Semicon India Program:

   • Allocates significant funding to promote semiconductor manufacturing.

4. SPECS (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors):

   • Encourages the manufacturing of electronic components and semiconductors.

How Singapore Can Help India’s Semiconductor Industry

1. Expanding Manufacturing Capabilities:

   • Collaborations with Singaporean firms for assembly, packaging, and testing can reduce costs and enhance technology transfer.

2. Talent Development:

   • Partnerships with Singaporean universities for training in microelectronics and semiconductor engineering.
   • Student exchange programs to build a skilled workforce.

3. Industrial Park Development:

   • Establishing Wafer Fab Parks in India to attract global players.

4. Advanced Technology Access:

   • Singapore’s expertise in semiconductor technologies can boost Indian firms’ capabilities.

India-Singapore Relations

• Historical Ties:

  • India recognized Singapore’s independence in 1965. The relationship dates back to 1819 with Stamford Raffles establishing Singapore as a British trading post.

• Trade and Cooperation:

  • The Comprehensive Economic Cooperation Agreement (CECA) was signed in 2005.
  • Singapore is India’s largest trade partner in the ASEAN region, accounting for 2% of India’s trade.

• Cultural Connections:

  • Tamil is one of Singapore’s official languages, with ethnic Indians constituting 1% of its resident population.

Significance of Semiconductors for India

• Industrial Development:

  • Semiconductors drive growth in electronics, automotive, and telecommunications.

• Technological Sovereignty:

  • Domestic production ensures a stable supply for critical sectors like defense and AI.

• Global Supply Chain Role:

  • Enhances India’s influence in global supply chains.

• Digital Transformation:

  • Supports 5G, AI, and smart city

• Skill Development:

  • Boosts demand for STEM education and specialized R&D skills.

Challenges in Semiconductor Manufacturing

1. Capital-Intensive Nature:

   • High costs in R&D and infrastructure deter investment.

2. Talent Shortage:

   • Over 1 million skilled professionals needed by 2025.

3. Technological Gaps:

   • Limited access to advanced technologies dominated by Taiwan and South Korea.

4. Environmental Impact:

   • The sector contributes 31% of global greenhouse gas emissions.

5. Global Competition:

   • Emerging markets like Malaysia and Vietnam present stiff competition.

Way Forward

1. Education and Training:

   • Expand semiconductor-related programs in universities and collaborate with global firms for practical training.

2. Indigenous Chip Design:

   • Establish centers for chip design in Bengaluru and Hyderabad.

3. Supply Chain Development:

   • Create Special Economic Zones (SEZs) dedicated to semiconductors.

4. Sovereign Semiconductor Fund:

   • Invest in cutting-edge fabrication technologies like 3nm and 2nm.

5. Green Semiconductor Initiative:

   • Focus on reducing energy and water consumption in semiconductor manufacturing.

Conclusion

India’s partnership with Singapore offers immense potential to enhance its semiconductor capabilities. By leveraging Singapore’s advanced expertise and India’s cost advantages, both nations can create a mutually beneficial ecosystem. For India, this collaboration aligns with its ambition to become a global semiconductor hub, fostering technological sovereignty, economic growth, and digital transformation. Understanding these developments is essential for competitive exam aspirants, offering insights into global trade dynamics, technological innovation, and strategic partnerships.