At #SemiconIndia2024, PM Modi shared his vision to make India a global hub for semiconductors. Will this chip dream turn into a reality?
ICEA's Pankaj Mohindroo and Counterpoint Research's Tarun Pathak share insights on 'Big Story'. #NDTVProfitLive
ICEA's Pankaj Mohindroo and Counterpoint Research's Tarun Pathak share insights on 'Big Story'. #NDTVProfitLive
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00:00You
00:30can bet on India when the chips are down. This is what Prime Minister Modi's pitch for the
00:38semiconductor companies present at the Semicon India event 2024 was. Now even though India is
00:44a late entrant in the semiconductor space, the government's push underlines the economic and
00:49strategic importance of the sector. On the big story this evening, we discuss the reasons for
00:55this push and how India can create a place for itself in the chip making landscape. Good evening,
01:00you are watching NDTV Prophet and I'm Nupur Talwar Suri. We begin the show with a report
01:05from the Semicon India 2024, an event that highlights how important India is preparing
01:12itself to become a global competitor in this highly challenging sector. India and semiconductors,
01:21this is a twist that has been in the making for a while and now in its second attempt under the
01:28third term of this current government is when we're seeing some sort of fruits finally fructifying. It
01:35all started about 14-16 years back when semiconductors really started to become a very
01:42prized commodity within Asia. We saw Vietnam step up, we're seeing Malaysia and Singapore step up
01:49into the game of semiconductors. India too tried but then it did not work out at that point in
01:55time. There was a lack of vision, you can call it a lack of technical prowess at the time as well.
02:01But what we're seeing now is a very definite foray into semiconductors as an industry. What we're
02:09seeing from India is an all-round approach. It is also a realization that semiconductors
02:17touch everything around us, from the mic I'm speaking into, the phone I'm holding,
02:22to the camera that is recording, also the light that is powering. Everything requires chips,
02:29everything requires a brain and that brain is the chip or the semiconductor. That is the reason why
02:35India is finally understanding the value of it and getting into it. Also, the COVID pandemic
02:41actually really became the stepping point for a lot of these countries that did not realize the
02:49advantage of semiconductors because when there was a global shortage, a lot of electronics
02:54manufacturing was completely stalled. We also have seen how NVIDIA has grown to its stature of being
03:01a pure chips company. Moving on to the opportunities that lie, like I said, it is a part of
03:08all sorts of electronics and it's also a part of the life chain of any sort of electronics
03:13manufacturing. So, if India wants to be a leader in electronics manufacturing, the base has to be
03:18set and that base is semiconductors. All right, and the Prime Minister spoke at the Semicon India
03:252024 event. He talked about India's sparkling semiconductor industry and the government's
03:30efforts to make the nation a hub for manufacturing chips.
04:00India
04:06increasing the numbers of chips produced in India.
04:12India
04:37also the big questions that we are asking on the big story this evening.
04:41Why is India giving a push to semiconductors now? Can India emerge as a global semiconductor hub?
04:52And how will India beat Taiwan, South Korea, China and the US in the global semiconductor market?
04:59And to answer those questions and many more, we are now joined by Mr. Tarun Pathak. He is Research
05:05Director at Counterpart Research and also Mr. Pankaj Mahindra. He is the Chairman of the ICEA.
05:11Good evening, gentlemen. Thank you very much for joining in. Thank you. Thank you for having us on
05:15the show. Mr. Mahindra, first to you. Now, obviously, the global chip industry is dominated
05:23by a large number of companies and they are part of a very small club. India is a late entrant,
05:32but the push from the government is extremely evident.
05:36Now, how do you see the current landscape and how do you see India's ambitions?
05:42These are very, very exciting days. From being skeptics, we are becoming extremely optimistic
05:51and very excited about this. I think the foundation was laid by this extraordinary growth
05:56in mobile phone manufacturing and electronic manufacturing. So crossing 50 billion in mobile
06:02phone manufacturing, 100 billion in electronic manufacturing, we are kind of now big boys.
06:09We've arrived. The semiconductor work started about just two, two and a half years back.
06:15And the progress is extraordinary. I mean, five projects getting grounded in the face of so much
06:23investment globally. Coming back to your specific question on it's a small club. Well, yes and no.
06:34We have been able to penetrate to a very large extent because of the credibility.
06:43This is something where all the ducks have to be lined up. Outreach, processes,
06:53SOPs, custom clearance, how the advanced pricing is done. So it is a whole team India effort.
07:05Of course, with very, very strong leadership from the prime minister and from the minister
07:13Ashwini Vaishnav, we have a very, very extraordinary team, which is working very passionately.
07:20So there is competence, there is passion, there is commitment, and we are putting our money
07:27where our mouth is. All these factors and state governments, let's not forget the state governments,
07:33the state governments are playing a very extraordinary enabling role. Could you imagine
07:39that Assam is putting up a packing facility and Gujarat is having four new projects,
07:48which is becoming a semiconductor hub of the world now. I think the big boys were watching us.
07:59Micron broke the ice. Then the big boy from India invested in the project, in the fab and the
08:07packing facility, followed by Renesas and CG and Keynes after that. And there are a number of other
08:18projects which are also in the pipeline. This particular semiconductor executive summit
08:26yesterday had almost the entire global big boys there. Of course, not all, but global leaders
08:36from almost 40 companies were there. And the second tier leaders also from a large number
08:46of companies were there. And the exhibition has an extraordinary number of companies.
08:51So it has been a leap for us and faster than we expected.
09:01So these are good times. I must say these are good times.
09:04And of course, exciting ones that you are very happy to be part of. Now, if I could,
09:12I'll come back to you in a bit. But Tarun, if I could bring you in now. India's move to go deeper
09:19into this and develop a semiconductor industry in India is also driven by strategic imperatives.
09:28Of course, there is the economic side of it. But what's your sense on how do we now navigate
09:34both the strategic side of it as well as the economics of it? Because strategically,
09:41we are likely to see more strained ties between US and China, and that's likely to impact
09:47everybody around the globe. Yes, definitely. I think a very
09:51important question. First of all, I agree with Mr. Mahindra completely on it's very exciting times.
09:56And I'll say like India is chipping in at the right time. What we are seeing strategically,
10:03after the COVID, the entire geopolitical situation came into picture and everyone was saying, hey,
10:08why the entire world is putting X in one basket, which is like China. We need to diversify beyond
10:15or rely less on one nation. And then there were discussions started happening beyond a particular
10:21nation. And then obviously, India emerging as the leading one in that space. Obviously, there
10:27are a couple of things that needs to be looked into. So strategically, I think we are very well
10:32placed. So there are a couple of things that actually are in favor of India right now. If you
10:36look at 20% of the global semiconductor workforce is here in India. And if you look at the design
10:43perspective, we are even better than some of the even rival nations we are competing. So it's also,
10:50there is one word which Prime Minister mentioned is the aspirational India. I think that is big,
10:56because if you look at right now, from the economic perspective, which is the second part
11:02of your question is, if you look at the consumer goods, one, the integration of semiconductor is
11:08increasing. Every consumer electronic good, there is a increasing content of semiconductor, which is
11:15happening. And if you look at the devices around us, almost there is 1.5X increase in the number
11:23of devices that are relying more on the semiconductors around. So which means you as a
11:29nation need to be really, really be dependent on these things. There were times when we were
11:35discussing data is the new oil and everything, but we believe for the next decade and the decades
11:40after semiconductor, I think that is going to be the most important segment that the nations who
11:48think of like self-reliant and everything that we need to achieve, we can't leave this
11:55opportunity open for other nations. So I think we are, like I said, chipping in at the right time.
12:01And there are a lot of synergies in place. Like I said, global workforce, we already have like
12:06almost number two in annual STEM graduates globally. We have almost like 600K in terms of
12:14graduates that are enrolling in electronic programs. So that are things we have started
12:19on a positive note, like Mr. Mahendra said, very, very exciting times. And yeah, and I'm coming from
12:26Semicon right now. And you look at the excitement on the ground, we have seen more foreign delegates
12:32this time. And they were like one, one gentleman gave a very interesting comment to me, like from
12:37the India perspective, they're saying initially a couple of years back, semiconductor used to be
12:41very complex thing. But now, a lot of you who are talking semiconductors in India are making this
12:47discussion very easy. So I think that is one area that we are understanding the complexity
12:54forward in a very easy way. Absolutely. So as you're saying, Tarun, you know, there's a lot
12:58that's working for us. But Pankaj, if I could come back to you, but this is also very expensive
13:05business and one that is very capital intensive. Now, how significant a challenge do you think is
13:11this for us, given that, you know, there will be a large number of domestic players who will
13:17want to stay away. So what is it that we can do to make it more exciting?
13:24Look, if you want to keep an elephant, you have to enlarge the doors. We have to change our mindset,
13:30right? And this is not just another industry. This is very strategic.
13:38To put it very simply, semiconductor is the brain. It's like, you know, body is working
13:45without the brain, which is what all mechanical and electrical things were.
13:50They were brainless, right? You had a fan, which was working like that.
13:54Mobile phones always had some brain in it, even the feature phones. But now everything needs a
14:01brain because the smart generation like yours, you want everything smart and the next generation
14:09wants it to be much smarter. They are restless, impatient, and they want things to be smart.
14:15They want more value from their products, right? Now, India is known for frugal engineering and
14:25frugal outcomes because we are at 2500 US dollars. Three and a half percent of the world GDP
14:32is feeding 18% of the people. So we know how to do things better. You know, we just need that
14:40catalyst. And this cannot be calculated organically. The ability of India to do
14:50very frugal engineering and design. So, the party has just started. In the design,
15:00when this ecosystem sets up and what Tarun said, 20% of the workforce of design engineers is in
15:07India. Now, those people have to form groups, startups, you know, bigger companies have to
15:13come in. I'm so excited. L&T has set up an outstanding organization for design and design
15:22captures 40 to 50% of the value in semiconductors. So, this is an area where India is going to excel.
15:30We need to support that and the return on investment will be the highest. We may invest
15:36maybe just 50 million in a company which can be worth a trillion dollars. Let's find out how much
15:42was invested in NVIDIA and what is the value today. So, that great stimulus and that great
15:50value creation which is going to come from design is going to set off all these so-called stimulus,
15:57subsidies, etc., which we are putting together. Let's not get restless. Let's support this for 10
16:02years. Infrastructure is built for the long term. This will not happen till we have fabs
16:12and till we have packing and we have the supply chain. So, the whole ecosystem has to be built.
16:20We have to remain very humble and very conscious that we are a country of limited
16:26capital and there is an enormous responsibility on us that public money has to be spent in the
16:34most frugal manner with the highest return. And I can assure you that the ISM, MITEI,
16:41and the Government of India, and the entire community, industry associations, everybody
16:46is walking the talk on it. We are very conscious about it and I think we'll have glorious results
16:53as one of the speakers mentioned that the center of gravity of semiconductors is going to move to
16:58India. It looks very chip-on-the-shoulder type of pun intended remark, but I think it is actually
17:08going to happen. And last, Nupur, we have the demographic dividend. Tarun just said
17:14that the number of engineers we are producing, we will be the workforce of the world.
17:2050% of the workforce, the new workforce which has to come and the workforce which has to get
17:27replaced is going to come from India. And we have to invest the maximum. And as you said earlier,
17:36investments in our education has benefited the Western world a lot because we lost a lot of
17:44this thing. But as you said earlier, I can give you 10 people, senior people
17:53who have left their glorious lifestyle in the West, in Silicon Valley,
18:01having the most luxurious life. And as you said earlier, obviously, we want the labor to go hand
18:12in hand with the brains. And we want all of that to work for India. Stay with us. I'm going to
18:19quickly play out what Yogi Adityanath, the Chief Minister has said, just to take forward the point
18:27that this is going to be a lot of collaboration that's required between the states, the center,
18:32as well as the various other stakeholders. Let's quickly listen and then we go back to our guests.
18:42Yogi Adityanath, Chief Minister of India
19:12All right, Tarun, if I could come to you on this one. Now, one of the things that we are seeing,
19:28of course, is a lot of collaboration that is taking place between the center, the state.
19:34On the other side, we also need a lot of collaboration to come in, in terms of research,
19:39fabrication capabilities. At this moment, we rely heavily on foreign technology. How do you
19:46think we can bridge that gap? Absolutely. I think think of it as more like a foundation,
19:52so we are building a foundation. So obviously, we need a relevant partnership in this space.
19:58So one big thing as an observer of the industry, what I've seen changing in the past three to four
20:04years is the relevant partnership. So you take out examples like what is happening with Micron,
20:10what they are doing, Tata. The investments are going in a very right direction. Obviously,
20:16you will need a global know-how, you will need a tech transfer. And I think what we need to look
20:22at here is we need to build a domestic IP, so that IP remains here. Because unless until that
20:28doesn't come here in India, we will be still reliant on foreign players. So I think there
20:33will be a collaboration for sure that is going to happen. And there will be a lot of tech transfer
20:39know-how that is going to happen between these companies. And mind you, for example, we need
20:44to change the narrative. As much as India needs these big companies, more than that, these big
20:51companies these days are target India. And the reason is why, if you look at we are the youngest
20:56nation in the world, we are the fastest growing consumer electronics market in the world.
21:01We are the fastest growing in terms of the revenue, in terms of average selling price of
21:06most of the consumer electronics. China is driven by replacement demand. US is flattening out. So
21:12where is the next demand that is coming? So that's India. But at the same time, these companies are
21:17also looking at India as an export opportunity as well. Apple is exporting more out of India
21:22than what they are selling in India. So that's a classic example. I think the moment, think of it
21:27as more or less a flywheel effect. The moment you start attracting these talents, there will be
21:32synergies in place. There will be tech transfer that will happen behind the scenes. And then
21:37there is a skill development that will happen. And semiconductor, it's like Ms. Mahindu said,
21:42it's not something which is like one year or two years. Even in these fabs, you look at allocation
21:47and the planning, it is 10 years down the line, two decades down the line. So yes, that will happen
21:53if we start the framework now. Like I said, it's a foundational thing. We need to do the similar
21:58kind of foundation in our skill set as well. I think that is going to be very, very important.
22:03We do not have a lot of, let's say, PhD graduates in that as compared to what we see in countries
22:09like Taiwan or so. But then we have the advantage of the youngest nation in the world and an
22:15aspirational workforce. So that is going to change for sure. And it's like a flywheel effect. Like I
22:22said, it will start happening once these couple of companies start expanding their presence in India.
22:28Right. Also, today's event saw Mr. Ashwini Vaishnav. He, of course, talked about the fact
22:35that we want to democratize technology. And the government is working towards that. I'm
22:41going to play out that comment that came in from Mr. Vaishnav. And then, Tarun, I'll come back to you.
22:46After many attempts, finally, it was under our Prime Minister's visionary leadership that we
22:54succeeded in getting the industry to our country. Within the first phase of our mission, in a very
23:00short time frame, five semiconductor units have been approved. Construction is rapidly under
23:07progress in the Micron unit, the Morigao Tata unit, construction has started, and the other
23:14three units, construction will start very soon. Permitting, getting all the permissions has
23:20happened in a record time frame, which is, if you benchmark it with the rest of the world,
23:26this is indeed a new record. All right. So I'm going to go back to Mr. Mahindra on this one.
23:31Mr. Mahindra, one of the things that the Indian government has been actively working on
23:36is these bilaterals that they are signing. The Prime Minister was recently in Singapore. He
23:41signed an MOU on semiconductors. We've had a bilateral between India and the US. So,
23:49is that the way forward to bridge the time, you know, whatever we have missed so far?
23:56This is a part of the recipe. It's a part of the recipe. You know, this is an industry where
24:05everything has to be extremely synchronized. And the bilaterals are a part of this,
24:13that technology transfers, you know, institutions like IMEC and technology transfers, bilateral
24:21understanding and all that. This is a part of the ingredient. You know, I'm very idiomatic today,
24:30I must say. But I think only with every part of the flavor being in the recipe, you can get the
24:39final outcome, which is optimum. And we have to strain every nerve to see that. And that is
24:46happening. We have, Ashwini Vaishnav is an extraordinary minister. He's worked like a
24:52professional, like, you know, like an entrepreneur. And he's building the industry like that.
25:00All right. Mr. Mahindra, thank you very much for joining us.
25:04I'm going to go back to Tarun on this one. Now, Tarun, one of the things that, you know,
25:11everybody's thinking about right now is how do we work at the scale that say, Taiwan is working at,
25:19you know, how do we compete with these global giants? And what is it that we need to do to
25:25reach that level? Right. So, I think India is taking a very different approach. So,
25:31let me clear this. Like, we are not directly competing with Taiwan. Like, so if you look at
25:35the TSMC of the world, so there are two things in the semiconductor industry. One is your advanced
25:40node and one is your mature nodes. Like TSMC, like they are building 3 nanometer, 5 nanometer,
25:467 nanometer. But what you have seen today, what the kind of announcement what Tata has done,
25:51they are saying, okay, we'll start with 110 nanometers, 24, 28 nanometers. And we'll start
25:59with that. We are not, that's why we say that it's a very, like, you can say practical phased
26:05scaling of the semiconductor push in India, because we all know our limitations and
26:10boundaries in a certain sense. And now we are not going to say, hey, we are going to create another
26:14TSMC in India, because practically that is not possible as of now. But then we are saying, hey,
26:1965% of the electronic components that these require semiconductors that work on the older
26:25process nodes, and those older process nodes cut across different segments, be it like automotive,
26:30be it like consumer electronics, defense and others, we'll start with that. And then we'll
26:35scale our journey, we'll look at the know-how. So I think that is what we have taken.
26:40Absolutely. So what you're saying is that we've begun the journey and we hopefully will be very
26:44successful with it. Thank you very much, Tarun, for taking out the time to be with us.
26:49All right. Now, semiconductors, of course, are known as the brain of modern electronics,
26:52but understanding the technology can be a bit tricky. So here's an explainer for our viewers.
26:59Semiconductors are materials that can both allow the flow and block the flow of electricity under
27:04certain conditions like temperature and magnetic field. They're also called the brain of modern
27:10electronics. They're commonly made of elements like silicon and germanium. Depending on the
27:16purity of the semiconductor, they can be classified into two types, intrinsic and extrinsic.
27:21Intrinsic semiconductors are pure and unadulterated. Their electrical conductivity is low
27:28and increases with heat. Extrinsic semiconductors, on the other hand, are doped with impurities to
27:34improve their electrical conductivity. This makes them more suitable for electronic devices in
27:40everyday life. Now, right from our phones in our pockets to high-end devices used in healthcare,
27:45defense and transport, semiconductors are used everywhere. They are also used in technology
27:51related to artificial intelligence and quantum computing. They're literally the life cells of
27:57technology. India's semiconductor industry was valued at $34.3 billion in 2023, and it is
28:05estimated to cross a valuation of $100 billion by 2033. The industry in our country is segmented
28:14into two categories, component and application. By component, we have memory devices, analog IC,
28:21MPU, which is memory protection unit, MCU, microcontroller unit, sensors, discrete power
28:28devices and others. By application, we have telecommunication, defense, industrial,
28:34consumer electronics, automotive and others. Now, some major semiconductor players in India
28:40are HCL Technologies, Vedanta, Tata LXC, Bharat Electronics and Dixon Technologies, among many
28:47others. At the recent Semicon India 2024 event, Prime Minister Narendra Modi highlighted
28:53the government's focus on growing the sector furthermore.
28:56Well, that's all we have time for right now on The Big Story. Thank you very much for joining us.