Why Is It not Possible to make a truly 100% made in india smartphone?
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Why Is It not Possible to make a truly 100% made in india smartphone?

Smartphone in India is far from being self-reliant when it comes to consumer electronics manufacturing – especially smartphones. The smartphone segment in India is particularly dominated by Chinese brands. 

why it’s not possible — yet — to 100 percent make a smartphone in India. The country has several hurdles to cross before it can start building good-quality smartphones from scratch, but analysts feel that if the right steps are taken immediately, the country could reach its goal five to seven years from now. first understand ..

The difference between making and assembling

India has graduated from a SKD (Semi Knocked-Down)-type manufacturing, to CKD (Completely Knocked-Down). However, all the major components (for manufacturing a smartphone) are sourced from China, and are only assembled in India. The three most important components of manufacturing a phone are chipset, memory and display, of which the first two require high-end technology, uninterrupted water and electricity supply, and very skilled manpower to run the automated machines in a closed and vacuumed environment.

Lack of semiconductor wafer fabrication (FAB) units

semiconductor wafer fabrication (FAB) units

Possibly the biggest hurdle to 100 percent Make in India for smartphones is the absence of semiconductor wafer fabrication (FAB) units in the country, also just called fabs

Fabs make semiconductor chips – an essential component found in smartphones, tablets, and even PCs of today. there are only a few fabs in the world, and the leading ones – TSMC and UMC – are in Taiwan.

It takes billions of dollars of investment to build these foundries, and setup costs for TSMC’s 28nm fab was $9.3 billion in 2010, and reports for same company’s costs for its upcoming 3nm fab to be $23 billion. Even with the right investment though, building up this ecosystem will take time.

Where Does India Stand?

While India has done well in terms of chip design and electronics manufacturing, there have been challenges in setting up of Semiconductor Wafer Fabrication (FAB) units in India for a long time. This is due to multiple factors, including not just the lack of infrastructure and skilled labour in the country. It is also difficult to compete with neighbouring countries like China and Vietnam which have been favourite destinations for global chip manufacturers due to better cost-efficiency. It is for these reasons that Intel stated in 2014 it had no interest in starting manufacturing in India.

There have been attempts to set up semiconductor fab units here by private companies in the country:

  • Hindustan Semiconductor Manufacturing Corporation (HSMC), a consortium of companies that included ST Microelectronics and Silterra Malaysia was aiming kickstart chip manufacturing plant in Gujarat, a project worth ₹30,000 crore. The government in 2019 cancelled the letter of intent granted to HSMC and now there is no such proposal from any private company to initiate such a project. The reason was that the consortium could not submit the required documents asked by the government for setting up of Semiconductor Wafer Fabrication (FAB) unit. HSMC had been backed by AMD and has also received ₹700 crore in funding from Mumbai-based Next Orbit Ventures. 
  • Then there was another consortium led by Jaiprakash Associates, which partnered with IBM and Tower Semiconductor of Israel to start chip manufacturing in UP. In 2016, debt-ridden Jaiprakash (JP) Associates has pulled out of the ₹34,000-crore. If the only two private sector consortiums cleared by the government to establish large scale chip manufacturing in the country could not make it happen, then it’s certainly a bad indicator to why India is lagging behind in the space. 

What Are The Hurdles?

indian semiconductor manufacturer

One of the biggest hurdles in setting up fab manufacturing units is the fact that it requires massive investment. In addition to the huge cost, running in billions of dollars, manufacturing even a single chip requires hundreds of gallons of pure water, which may also be hard to find in India in the required quantities. An uninterrupted power supply is another major hurdle.

The heart of the issue is that India is still not unto the par in terms of the basic infrastructure needed to pursue endeavours in the chip manufacturing space. There is also constant price pressure from other global players, particularly China which is also building a homegrown chip program for the adoption of local semiconductors in 70% of its products by 2025.

Clearly, there is no dearth of talent when it comes to India becoming a dominant player in semiconductor chip manufacturing.Yet, the country has struggled to find a way to establish fab units needed for large scale manufacturing. Now, with the rising demand for electronics, India is a large net importer of semiconductor chips. In fact, experts say that India is spending more money on import of semiconductor than on oil. The way to reduce the dependency on chip imports is to create semiconductor manufacturing units within the country.

So next time anyone asks you that why it’s not possible — yet — to 100 percent make a smartphone in India. You can suggest this article.

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