Industry
TCS, IBM, Applied Materials, KLA in race to modernize India’s state chip unit
Summary
- These companies are expected to submit their bids soon, one of the two executives said on condition of anonymity. The last day to submit the bids is 16 April.
Plans to upgrade India’s lone state-owned chip fabrication unit have picked up pace, with the Centre meeting 35 companies last month in a bid to evaluate their roles in a potential deal that is worth ₹4,000 crore.
According to two executives aware of the matter, companies like TCS, HCLTech, Israel-based Tower Semiconductors, and US firms such as Applied Materials, KLA Corporation, and IBM, among others, are vying for the opportunity to bring the existing 180-nanometre (nm) semiconductor production line of Semi-Conductor Laboratory (SCL) in Mohali up to speed and eventually move into more advanced chips.
These companies are expected to submit their bids soon, one of the two executives said on condition of anonymity. The last day to submit the bids is 16 April.
“Companies like IBM, Belgium-based IMEC, and Tower Semiconductors can help SCL with advanced technology transfers, whereas the major role for equipment replacements can be done by firms such as Applied Materials and KLA," the executive cited above said, adding that IT services companies such as TCS and HCLTech can help with gap analysis and consultation because of their expertise in managing similar projects.
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Queries emailed to HCLTech, TCS, IBM, IMEC, Tower Semiconductors, and KLA did not elicit any response till press time.
“It's our policy not to comment on speculation," said Applied Materials in response to Mint's query over email. In 2023, the company had announced an investment of $400 million to build an engineering centre in Bengaluru. The centre will focus on the development of semiconductor manufacturing equipment technologies.
Significance of the deal
SCL’s current tender to revamp its existing facility is divided into three packages or tasks, which involve gap analysis and cleanroom modifications, technology transfers, and replacement of decades-old equipment. The companies can bid for multiple packages as well as through consortium mode.
The development assumes as once SCL modernises itself completely, it would be India’s very own company of strategic importance to develop the country’s semiconductor ecosystem.
“With modernisation, SCL would be the only option available for research and development (R&D), especially for chip design companies in the country to do prototyping and low volume production," a government official said, requesting anonymity.
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The official added that currently, chip design companies have to tap global firms such as a TSMC or a GlobalFoundries to get even limited samples of chips before actual production can start. This not only incurs huge costs but also limits their ability to do failure analysis, testing, and identify any challenges in manufacturing or assembly firsthand.
“After upgrading the current fabrication line, the plan is to develop SCL to produce chips using more advanced technologies, such as 65 nm and 40 nm nodes," the official added.
Nodes refer to the specific technology or size of the transistors used in semiconductor chips. These nodes are measured in nanometres (nm), and as the number decreases, the transistors become smaller and more efficient.
For modernisation to lower nodes, SCL is also in touch with Tata Electronics, according to the official cited above. Tata Electronics is setting up its own fabrication unit in the country with Taiwan-based Powerchip Semiconductor Manufacturing Corporation (PSMC). The company can provide SCL with the requisite technology needed for its modernisation.
Tata Electronics refused to comment on Mint's queries.
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Under the India Semiconductor Mission, the government has earmarked around ₹10,000 crore for modernisation of SCL as of now. “However, the budget is expected to go up once it forays into manufacturing advanced chips," the official quote above said.
Strategic move, but...
“SCL modernisation is a strategic imperative planned and propelled by the government with a budget outlay of $1 billion that will be the core and sole kinetics to meet the LVM (low-volume manufacturing) needs of varied ‘essential’ chip startups, academia and government – catering to industrial, IoT, automotive, governance, space and defence needs of the country," said Danish Faruqui, CEO of Fab Economics, a US-based boutique semiconductor fab/OSAT greenfield projects advisory and implementation consultancy.
At the same time, Faruqui feels there is a critical gap in the SCL modernisation program—the absence of a government-sponsored, domain-competent semiconductor technical services firm. Such a firm can act as a government-appointed neutral project management consultant (PMC) and ensure governance and compliance for different stages for the success of the project, he said.
India’s chip maker
SCL has been serving strategic sectors like space and satellites, railways, and telecom, among others by supplying them 180 nm chips. It recently started offering end-to-end support including lower-volume production of chips, testing, prototyping, and packaging, to design startups in the country.
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The focus of SCL’s current upgradation is also to increase the production line capacity to 1,500 WSPM (wafer starts per month) from about 700 WSPM. A wafer is a thin, flat disk made of silicon (or sometimes other materials) that serves as the base for creating integrated circuits (ICs) or chips. WSPM refers to the number of semiconductor wafers that are processed or started in a semiconductor fabrication facility (fab) within one month.
