InvestorQ : How do think will be the response to the Rs.76,000 crore PLI scheme for semiconductors? Do you see India benefiting from this program?
vidhya Laxmi made post

How do think will be the response to the Rs.76,000 crore PLI scheme for semiconductors? Do you see India benefiting from this program?

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sarah Leo answered.
5 months ago
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It is surely a good attempt by the government. The government has just announced an aggressive PLI plan for making semiconductors locally. Semiconductors are the wafer chips that go into every smart electronic instrument ranging from computers, smart phones, cars, washing machines, air conditioners, laptops etc. Semiconductors handle storage, processing and logic function execution. Today, the world is facing an acute shortage.

However the large scale manufacture of semiconductors is going to be easier said than done. That is because the needs of the semiconductor business are too stringent and the industry is just too capital intensive. The most important investment is the fabrication unit (Fab). Fabs don’t come cheap and a typical Fab room can cost between $3 billion and $6 billion, although the actual cost would be based on technology node and wafer capacity.

There is a larger challenge of having marquee customers to fill up the demand book and actually complexity of a Fab room. For example, a typical Fab unit or cleanroom is supposed to be 10 times cleaner than a pharma research laboratory. Maintaining air purity is critical as the chips are extremely sensitive to dust and moisture. There is zero room for error in cleanrooms and that kind of complexity would be hard to manage in India.

Finally, let us talk about market willingness. Large consumers of Fab chips like Apple and Samsung will not be too keen to disrupt their existing set-up. Fabs also get outsourcing orders from chip makers like Intel and AMD. However, building trust and comfort is easier said than done. Taiwan spent 40 years perfecting the ecosystem for semiconductors. From equipment to labour to port efficiency, there is a lot of catching up that India needs to do.

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