Pack a punch before we get fab at chips

India has moved a step forward in its BSMP - Big Semiconductor Manufacturing Plans - with Tata Electronics test-exporting packaged semiconductor chips. Silicon wafers containing hundreds of computer chips need to be packaged in material that keeps them safe and allows electricity to pass through them. This is the means through which chips communicate with the rest of the computer system. Although not as fundamental as fabricating chips - turning semiconductor material into a usable product before chips can be manufactured - packaging them involves advanced materials research to prevent overheating. Tatas are seeking feedback ahead of upcoming chip packaging capacity in Assam. This is in addition to a fabrication unit they are setting up in Gujarat with Taiwan's Powerchip Semiconductor Manufacturing Corporation.

Tatas could make up for India's initial missteps over semiconductor manufacturing. GoI rolled out incentives for chip-making when the need to diversify this concentrated value chain became evident to policymakers globally. The scheme was revised after initial proposals in an effort to broaden the product range, which led to the dissolution of a JV between Foxconn and Vedanta. Subsequently, Micron proposed to set up a chip-testing and packaging unit in Gujarat. Tatas have gone beyond with plans for both fabrication and packaging.

GoI is okay with peripheral development in the domestic semiconductor industry. It gives play to PLIs in the expectation that the scheme will be able to eventually draw in the really big investment in chip manufacturing. It also allows infrastructure to reach levels required for chip fabrication. The Tata project timelines put them ahead in the race with industries seeking resilient chip supply after the chokehold of the pandemic. In the process, it puts India on the map of chip-making nations. Speed is of essence, as countries try to establish domestic manufacturing to break Chinese dominance of the export market. With the direction set right, it's now one chip off the block at a time.