Why Chips Are the New Oil
Semiconductors, or chips, are the silent engines of the modern world. They are the brains inside every electronic device, from smartphones and cars to advanced medical equipment and defence systems. The global electronics industry, valued in the trillions
of dollars, runs on these tiny, complex components. Recent global events, like the pandemic, exposed the fragility of the semiconductor supply chain, which is heavily concentrated in just a few countries. This has made building a domestic chip industry a top priority for nations worldwide, including India, which sees it as vital for both economic growth and strategic autonomy.
The Urgent Call for a Full Ecosystem
Speaking at the recent Bloomberg New Economy Forum in New Delhi, Electronics and IT Minister Ashwini Vaishnaw pinpointed a critical vulnerability in India's ambitious semiconductor plans: a heavy dependence on imported materials. He stressed that for India to become a trusted global partner, it can no longer rely solely on others for essential inputs like specialty chemicals, industrial gases, and the silicon substrates upon which chips are built. Vaishnaw warned that without a robust domestic ecosystem for these materials, India's manufacturing efforts will not be sustainable in the long run. His call signifies a strategic shift from merely assembling chips to controlling the entire value chain.
What 'Semiconductor Resilience' Means
The term 'semiconductor resilience' refers to a country's ability to withstand shocks to the global chip supply chain. This doesn't mean complete self-sufficiency, as Vaishnaw clarified, but rather reducing strategic dependencies that could leave India's economy vulnerable to geopolitical tensions or policy shifts in other nations. The goal is to create a buffer by developing domestic capabilities. The minister noted that countries with established material ecosystems spent decades building them, but India must accelerate this process to secure its technological future and sovereignty.
From Fabs to Materials: India's Evolving Strategy
India's initial push under the India Semiconductor Mission (ISM) focused on attracting investment for chip fabrication (fabs) and assembly, testing, marking, and packaging (ATMP) units. While this has seen success with major players setting up plants, the government is now deepening its focus with 'Semicon 2.0'. This second phase, backed by a substantial outlay of ₹1.27 lakh crore, places a much stronger emphasis on developing the upstream supply chain, including capital equipment and, crucially, the raw materials Vaishnaw highlighted. The strategy is to move methodically up the value chain, similar to how India progressed from assembling mobile phones to manufacturing many of their components locally.
The Road Ahead: Challenges and Opportunities
Building a domestic materials base for semiconductors is a formidable challenge. It requires massive capital investment, deep technical expertise, and overcoming intense global competition. Creating semiconductor-grade materials involves handling hundreds of highly pure chemicals and gases with extreme precision, a capability that takes time to master. Furthermore, India faces a shortage of a specialised workforce for fab operations and materials science. However, the opportunity is immense. As the global semiconductor market is projected to surpass a trillion dollars within the next decade, a resilient domestic ecosystem could create hundreds of thousands of jobs, reduce import bills, and cement India’s status as a high-tech manufacturing powerhouse.
