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Saturday, March 2, 2024

Semicon atmanirbharta for artificial intelligence ambitions – Opinion News

Semicon atmanirbharta for artificial intelligence ambitions – Opinion News

By Satwik Mishra

India is in the middle of an artificial intelligence (AI) revolution, with the potential to amplify its economy by a whopping $967 billion by 2035, as highlighted by the India AI expert group report this month. With predictions of AI catapulting India’s economy to new heights, the spotlight deservedly shines bright on semiconductors.

The AI zeitgeist has pivoted on large-scale models which demand nearly 100 times the computational resources of their counterparts from earlier eras. Before 2010, computational growth aligned with Moore’s law, doubling power every 20 months. However, the advent of Deep Learning in the early 2010s introduced a paradigm shift with computational resource utilisation doubling nearly every six months.

As compute demand surges, the essential role of semiconductors, the backbone of computing processes, intensifies. Their production is complex and expensive, involving over 500 steps and taking four to six months to complete. First, chips are designed using electronic design automation software. Subsequent fabrication occurs in specialised facilities. Establishing such a fabrication plant in today’s market is financially demanding, with costs approximated at $20 billion. Finally, chip assembly, testing, and packaging (ATP) involves cutting wafers into chips and adding wire connectors to chip frames. Yet, the semiconductor market is soaring. From a robust global valuation of $573.44 billion in 2022, it is forecasted to soar to an astounding $1,380.79 billion by 2029, registering a CAGR of 12.2%.

Beyond their technological significance, semiconductor chips now wield influence on the geopolitical stage. Nvidia, a prominent chip maker, is hindered by regulatory constraints imposed by the US last year, limiting its offerings to the less advanced A800 and H800 chips in China. This month, the US followed up with more stringent regulations, introducing reporting rules for advanced chip sales, tightening controls on top-tier chipmaking machinery and software, and blocking Chinese firms from sourcing chips through overseas branches. Similarly, Dutch firm ASML, the world’s leading equipment supplier for the semiconductor industry, faces export controls, requiring government approval to service or supply key equipment like the Extreme Ultraviolet (EUV) and Immersion Deep Ultraviolet (DUV) lithography machines essential for advanced and memory chips production.

Presently, the semiconductor supply chain is precariously unbalanced. Taiwan accounts for over 60% of global supply. This dependency exposes global tech to vulnerabilities, including geopolitical tensions, trade wars, or natural disasters. Governments worldwide have recognised this Achilles’ heel, prompting action to reconfigure the landscape of the semiconductor supply chain.

The US, backed by the CHIPS and Science Act in 2022, committed $52 billion in subsidies, spurring investment commitments of $210 billion. The UK is spending £100 million on purchasing semiconductors. The European Union has earmarked $47 billion in a bid to command a fifth of the global supply. Asian tech giants South Korea and Japan have introduced incentives, with attractive tax credits and capex subsidies, to push their semiconductor economies. And most recently, China has launched a $40 billion state fund to support its semiconductor economy.

India, spotlighting its global ambitions, has rolled out a $10 billion subsidy through the India Semiconductor Mission. The scheme includes incentives at design, production, and deployment stages. States are offering a capex subsidy in production beyond the 50% commitment by the Union government in setting up fabrication units.

However, financial investment is just one step. A comprehensive approach involving the amalgamation of securing a reliable raw material supply chain, advanced infrastructure, and facilities aligned with global benchmarks is paramount. In this endeavour, it is critically important to cultivate international collaboration to draw in best practices. Equally crucial is the investment in human capital. The prime minister’s announcement at Semicon India Conference 2023 highlighting the integration of specialised semiconductor curriculum in 300 engineering colleges aiming to foster a pool of 100,000 design engineers is a pivotal intervention and requires a sustained follow through.

India’s Intellectual Property (IP) ecosystem, marked by extended patent processing times and rigorous protocols, would need imminent reform. With a rank of 42 on the 2023 Global IP Index, strengthening the IP protection is essential to incentivise investment.

Finally, addressing semiconductor production’s energy use presents India a leadership opportunity in the sector. Semiconductor manufacturing is notoriously energy-intensive. Taiwan Semiconductor Manufacturing Company Limited (TSMC) accounts for 4.8% of Taiwan’s total energy consumption. By aligning its semiconductor strategy with the ambitious target of achieving 500 GW of renewable energy by 2030, India could set a gold standard which champions both sustainability and cutting-edge innovation.

As AI reshapes the global digital landscape, it draws its heartbeat from semiconductors. The nation that balances investment with innovation, collaboration, and sustainability will lead the way for our AI-driven future.

The author is with the World Economic Forum’s Centre for Trustworthy Technology
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