Opportunity for India in semiconductor fabs if it invests in facility & tools: ICANN CIO Ashwin Rangan

India possesses super scientific expertise for know-how development. Yet, we haven’t been in a position to emerge as a semiconductor Technology chief; IP possession in innovative know-how nonetheless evades India in most segments.

What are India’s possibilities of breaking into the elite membership of know-how management?

Ashwin Rangan, Senior VP of Engineering and Chief Information and Innovation Officer, ICANN (Internet Corporation for Assigned Names and Numbers) who was conferred the celebrated 2022 SoCal CIO of the Year ORBIE Award in US lately, is consulted by many nations and corporates, for know-how technique. In this interview, he sheds gentle on rising applied sciences, the complexities of semiconductor manufacturing, and India’s strengths and weaknesses.

Q. Where does India stand within the IT ecosystem?

In the ecosystem boundaries, on the high of the funnel, there’s {hardware} and software program. The high layer in software program is purposes, under that’s embedded software program. Semiconductors come alive when actual time working programs software program allow componentry. There is value-add and value-capture in each these layers.

In {hardware}, there’s a complete stack of applied sciences, with giant industries answerable for manufacturing them. These are computing, networking and storage units like smartphones, tablets, and many others. Mechanical componentry and semiconductors must be sourced from completely different elements of the world to deliver these units collectively.

At the very best stage, this requires assembling circuit boards into plastic and metallic casings, to create these remaining units; there’s value-add and seize there. Then, there’s circuit board manufacturing, the place packaged semiconductors (chips) are soldered onto circuit boards. Very low value-add work, however nonetheless required. Going a stage deeper, there’s backend semiconductor meeting and packaging, which tends to be extremely automated.

Finally there’s semiconductor wafer fabrication that is the place the majority of worth addition happens. When you break that into logic circuits and reminiscence circuits, logic circuitry is very delicate mental property and tends to be the place the lion’s share of worth seize happens; much less so with reminiscence circuitry, the place many of the worth has already been subsumed due to excessive automation, excessive commoditisation, and low switching prices.

Q. What is India’s current functionality in absorbing this worth seize?

Let’s ask the place we now have strategic power versus potential alternative. On the software program aspect, we possess strategic power within the utility area the place legitimacy has been established. That’s the place we made our presence on the planet identified for the final 40 years by means of corporations like TCS, Wipro, Cognizant, Infosys… the checklist goes on.

India is famend for creating and helping corporations in constructing utility software program, however not within the creation of authentic utility software program. That’s altering. There is excessive worth seize in platforms created in India lately; Zoho is an instance of a platform that may probably up-end established gamers in a brand new world the place “cloud first” is the applying mantra.

In the {hardware} area, India has potential in each layer on that stack of applied sciences. In each layer above the foundry layer, the place the manufacturing of semiconductors happens, others have staked a declare.

For packaging and testing, nations like Philippines, Vietnam and Malaysia have captured the area with a lion’s share of that market. South Korea which began in packaging and testing, is more and more transferring in direction of larger worth seize semiconductor manufacturing, relegating pure again finish meeting and testing to neighbouring nations.

It’s a really complicated world provide chain that requires excessive ranges of coordination throughout a number of distributors with excessive predictability of supply. Circuit design happens within the US; semiconductor manufacturing, backend meeting and testing, circuit board manufacturing, all happen in numerous elements of the world, and remaining packaging of those into the tip shopper unit happens largely in China, and to some extent in India.

These are pure logistics and provide chain oriented challenges, there’s positively a chance for India right here.

Q. What is the outlook within the chip manufacturing area globally?

The semiconductor chip trade is about $ 550-600 billion yearly, rising about 10-12% yearly. A number of the innovation is going on in Logic chips.Twenty years in the past, 90% of logic circuit demand was for CPUs, and 10% for FPGAs (discipline programmable gate arrays). That market has grow to be extra specialised, primarily based on purposes. Today, the logic circuit market is damaged into 4 completely different segments: CPUs (the place Intel dominates), GPUs (the place NVIDIA has a dominant market share), TPUs (which Google owns), and the FPGA phase, which has grown considerably.

Twenty-five years in the past, 40-50% of all logic chip manufacturing was within the US. Today, that quantity might be about 10%. With the emergence of foundries, which simply manufacture semiconductors, an increasing number of of manufacturing has been captured by pure play foundries like TSMC.

For chip design, corporations like Skyworks, Broadcom or Qualcomm specialize on this exercise. These corporations search for foundries who could make these chips for an inexpensive value, with wonderful logistics backing.

As US-based corporations look to the long run, it is extremely clear that IP is in danger as many nations that they depend upon grow to be query marks when it comes to stability. For instance, the Taiwan Strait state of affairs is a possible risk to the steadiness of the worldwide semiconductor provide chain, as a result of TSMC is basically primarily based there. Recognizing that danger, the US Government lately made obtainable 52 billion {dollars} in funding to advertise manufacturing of semiconductors within the US.

Re-shoring shouldn’t be the one resolution to this. Countries like India, with bettering infrastructure, might grow to be steady options.

Q. What will it take to realize this?

Improved, constantly dependable infrastructure is a needed prerequisite; there is a chance right here. Semiconductor fabrication might be probably the most complicated manufacturing course of. When I studied it, it had 183 discreet steps to etch chips onto a wafer that may then be sawn, bonded, examined and packaged. It requires immense investments. The time to manufacturing from breaking floor to the primary wafer lot that goes by means of is about 3 to 4 years.

Each of TSMC’s Arizona vegetation will probably be about $17 billion. The constructing itself is only a shell. The stage of funding is due to the complicated, refined manufacturing equipment wanted. For occasion, ASML, a Netherlands-based firm, is the one provider of bleeding-edge lithography tools. Similarly Tokyo Electronics for etching tools, KLA Tencor for measurement and inspection, Applied Materials for ion-implementation, Carl Zeiss lenses from Germany, and so forth. It prices lots of of tens of millions of {dollars} for every tools kind or piece.

Q. Can India afford to have a fab contemplating how complicated the method is?

There is a chance for India to play a task, supplied it makes the investments not solely within the manufacturing facility and tools, but additionally in predictable logistics and transport capabilities. This is a excessive value-capture alternative from a technique perspective. It begins with industrial coverage and help. You received to start out someplace.

In the US, Intel is breaking floor on a few foundries. However, it’s not even clear that they will afford to go it alone profitably, until they get native assist and help when it comes to tax breaks or employment incentives within the location that they select. In Germany, they’re being given help to the tune of eight billion {dollars}, along with about $15 billion of their very own funding.

On manufacturing functionality, a contemporary foundry wants about 3000 folks to function them 24/7, one year. There is a chance for high-paying jobs, ‘do it properly, and win the trust of the global supply chain’.

Q. India launched its semiconductor coverage in 2019,and is but to take off. Do you assume India can maintain the promise and develop its fab?

Wafer fab builds are usually identified to run a 12 months or two years plus or minus. I wouldn’t make a giant deal of a 12 months or two delay, given the pandemic and all of the ensuing disruptions.

One wants not less than $15-20 billion at the moment for a brand new wafer fab. If you wait two years, that quantity will go as much as 20-25 billion, as a result of know-how would’ve moved, resulting in higher sophistication.

We might select to have foundries which aren’t on the modern. The different factor that may make sense for top worth seize level could be specialty semiconductors. What is it that India desires to do is simply as necessary as whom to associate with and what sort of tools is required.

Q. What about India’s world Trust index?

The belief issue has improved in lots of different industries, resembling drug manufacturing and distribution, handheld telephones, the place we went from no manufacturing functionality to about 300 corporations in a number of years. That creates the legitimacy to say sure, India is more and more a worldwide participant.

With semiconductors, that (belief issue) must be considerably bolstered, as a result of whole trade segments could be stymied when semiconductor manufacturing and demand exit of sync. For instance, automobile manufacturing in US fell sharply in the course of the pandemic as a result of at the moment, so many automotive parts are semiconductor-driven. As a end result, the automotive trade was held hostage by the scarcity in semiconductor provides wanted. Reliable, predictable price and provide of semiconductors is a requirement for different industries to outlive, depart alone thrive. With semiconductors, it requires belief that’s at a considerably larger stage than with different sub-assembly and cargo industries.

(Choodi Shivaram is a senior freelance journalist)