Electronic System Design and Manufacturing Sector – M-SIPS, National Policy on Electronics, etc.

The challenges in being a chip hub


From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 3- Semiconductor chip manufacturing in India


India is aiming to manufacture silicon semiconductor chips.

Efforts to set up chip fabrication plant

  • India has intensified efforts to set up a semiconductor fabrication plant with the help of Taiwan, the market leader.
  • For this the government is investing over $7.5 billion.
  • The Tata Group is in talks with three States — Tamil Nadu, Telangana and Karnataka — to invest over $300 million to set up a semiconductor manufacturing facility.
  • In 2014, NASSCOM wanted to promote a National Technology Corridor along coastal A.P. stretching through the Visakhapatnam, Rajahmundry and Vijayawada region.
  • Given the abundance of water, sand (raw material for making silicon ingots), road, rail, ports and airport connectivity, the industry body wanted to push and promote the design and manufacturing of electronic chips.


  • IP and design: While welcoming such moves by the government and technology experts, local players in the segment say that chip making itself will not be enough.
  • Other aspects such as designing and Intellectual Property are required to make a mark.
  • Designing is what brings value to the chips.
  • If the Intellectual Property lies with the foreign entity, we end up manufacturing the basic material which does not serve the purpose.
  • Need to promote SoCs: Rather, we need an ecosystem to promote SoCs (System on a Chip) which makes more sense.”
  • There are several firms in India which are now making SoCs, which is a good sign.
  • Connect related industries: The bigger challenge and immediate need for the Indian government is to connect related industries in India to create the ecosystem, industry players say.

Consider the question “What are the challenges India may face as it aims to manufacture silicon semiconductor chips?”


The initiative is an uphill task as many factors need to come together for India to make a mark in the niche chip making and designing industry. Also, upcoming firms should be able to sustain themselves in the market when subsidies from the government are withdrawn.

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