Increasing gap in semiconductor industry

It is no secret that notwithstanding major spending, which by some claims is more than 50 billion USD, mainland China is still far from catching up with Taiwan and US duo together. The marginal technological complexity in further increasing the density of transistors on a semiconductor chip, is far from the grasp of China, which is a lone wolf in this area; while West is migrating from 7 nanometer resolution to 5 nanometer resolution. The big three – Japan, South Korea & the United States of America are far ahead quantitatively as well as qualitatively.

Semiconductors are a subset of a larger sector of science & technology collectively referred to as material science & technology. Inorganic semiconductors (especially Silicon) are the harbingers of future dominance.

FAB – IS NOT A PANACEA

Often Silicon and Silicon Fab are considered to be the panacea. This can only be the view of the uninformed or naive. Both Taiwan and South Korea have large Fabs. Yet, they are no match to the superiority of US and some selected EU nations (mainly Germany, to lesser extent France). Reason being - a Fab is like masonry, while cement and brick material research & production as well as scaffolding, cranes & lifters are still confined to manufacture in US & Europe. Undoubtedly, Fabs are a part of the supply chain, which has materials & tools as its foundation. I bet, that most in India do not even go as far as materials and tools in India, when it comes to semiconductors. They are hitched on ‘Fabs’. Not knowing that without an integrated capital machinery Fabs & materials ecosystem, strategic Fabs alone, will be nothing more than another naïve approach.

WHY INDIA ISN’T A PLAYER?

Under a poor research and development policy, inadequate, under-funded and worse – public R&D infrastructure, attracted more of the mediocre while a minority of outstanding scientists could not push the under-throttled locomotion of material science & technology. We either have none or poor quality resources in the area of material science. Traditionally, Russia and United States have been at the forefront. Taiwan and South Korea are more of the production giants, while R&D is still limited. China is catching up with US and Japan after heavy investment in material science industry; though it is to be conceded that the distance between the US and China is pretty substantial.

India has tried approaching the issue of development of semiconductor & material science Industry a few times by offering various incentives, but failed miserably. Erroneously, general view of material science is that it is all about semiconductors; and that of semiconductors is – it is all about silicon. This is very far from truth. Material science includes – (i) inorganic materials: crystal growth, special alloys, special inorganic materials, specialty gases, specialty chemicals, technical textiles etc.; (ii) Organic materials – special polymers, organic semiconductors, organic specialty textiles etc. And we perform abysmally poor in all of them. Literally all, barring none.

Einstein said repeating the same experiment expecting different results is silly. But we have been smartly (according to ourselves) packaging and repackaging the same old story and repeating it time and again. Offering Intel, AMD or real estate companies (Jaypee) to build Silicon Fabs in India. That is where our understanding & vision of semiconductors and material science ends. The result is known.

There is no doubt that material science industry at large requires State support. Nowhere has it grown with Government subsidies. The risk and reward ratio is highly skewed towards former making the sector high-risk low reward industry. Thus, having a viability gap for most, which needs to be funded by the State. Aforementioned is a necessary condition, not sufficient.

Public sector effort is a fundamentally flawed approach for lack of efficiency in decision-making in an immensely techno-commercially dynamic area, owing to public accountability. Secondly, merit & entrepreneurial zeal is sifted off in public sector enterprise, which is critical in pushing the limits of material science. I have never been able to understand why the Government does not allow the Public Sector Management, like private sector, to take home 10% of the profits. Just one single policy decision will make the prospective ventures more efficient, and attract the best talent. The earnings of Government through taxes and dividends will only go up for sure. While those who still linger on at the edge of existence, should then be sold out. Anyways, I desire not to digress from material science and semiconductors. It is high time visionaries are brought together, who have understanding of the material science industry and a sensible mechanism is created to make semiconductors and other material technologies happen in India. Else we will have no option but possess tanks but not know how to produce titanium alloys, try making fighter aircrafts without knowing how to manufacture composite bodies, keep on importing drones, fail to make reliable aircraft and helicopter engines, fail to make 50 years old basalt fibre material for composite tanks and special fire-resistant textiles, fail to make a single silicon solar cell wafer ‘fully’ in India, make a single space grade gallium arsenide solar cell in India, make an advanced heat pipe in India, even make a 60 year old Bismuth telluride Peltier element (used in car refrigerators & will be critical in next orbit of electronic cooling) in India, or even a Gallium nitride LED or a single chip that goes into the smartphones. Forget about meta-materials, diamond, advanced polymers, memory materials, smart materials, nano-materials and other advanced technologies, which will form the foundation of human life within next one decade. Can you imagine that India does not even have a Fab to manufacture red laser pointers (they are Gallium Arsenide lasers – a material for which Zhores Alferov my mentor got a Nobel Prize in year 2000 and was work done by him in 50-60s); every LED street light and LED home light in India is made from Gallium Nitride light emitting diodes, not one chip being manufactured in India, we do not manufacture a single LCD (Liquid Crystal Display) for a phone or Television, we do not manufacture a single lithium ion polymer battery in India (from material point of view). We have failed to indigenize 30-40 year old technologies like Mercury Cadmium Telluride detectors which are critical for every long range rocket or missile which guards India; not a single photo-detector for a night vision goggle.

Only when COVID came knocking, did the sleeping giant – Govt. of India, realized that India has little to no manufacturing of technical textiles. And the material needed for PPE kits is not available in India! I can keep on writing few more pages, but to no avail.

DISTANCE BETWEEN TWO ACCELERATING BODIES ONLY INCREASES

My worry is that the distance between India and US, Russia, China, Japan, Germany, France, South Korea and Taiwan is increasing with every passing day. Technological development and advancement in material science might come to a point where India might just never-ever be able to catch up. According to me, we are tethering unbelievably close to that point of no-catch up.

The world, we like it or not is moving toward inanimate technocracy – a society in which dispassionate AI systems will govern rule of law. And technology Companies will be as good as Governments in themselves. They are already shuttling the millennia old system where the currency was controlled by the sovereign, by issuing Bitcoins and lot of other competing crypto-currencies. Traffic systems are already unmanned and penalizing on slightest deviation from laid norms. Army-Airforce-Navy too will inanimate, progressively. In the world to come, there will be technological sovereigns and technology vassals and the judgment of sovereignty will be made not by direction or status of technological progress, but by the pace of it. India is standstill, while others are accelerating at increasing pace, leading to geometric increase of gap amongst the forerunners and static India.

I can narrate my own personal experience – I created India’s first Gallium Nitride Fab in Gandhinagar, Gujarat making a major investment, after I returned to India few years ago. We GaN Fab (Gallium Nitride is the second most important semiconductor preceded only by silicon), strategically and commercially critical for India. We created it as a vertically integrated Fab, and were the first ones to establish a commercial size material growth (Gallium Nitride Crystal Growth) facility. Having erected the facility, we were not supported by banks or other financial institutions with working capital. I knocked every possible door in India from the highest offices to those of relevant Ministries, Niti Aayog, Principal Scientific Advisor to the Govt. of India. behemoths in research and development from defense & space sectors; thinking that defense establishments are importing Gallium Nitride devices and are at constant mercy of US suppliers for critical equipment like High power devices, radio frequency devices needed for radars, synthetic aperture radars, radiation resistant ICs etc. The tragedy is that on one side Government is pleading with Western Companies to come and establish semiconductor plants in India, while a niche high technology startup, the only one in entire South Asia with peers only in US, Russia, China, Germany; which bet big investment on path-breaking material science enterprise – built without a penny of Government support or subsidy, is tethering to existence, and facing, nothing but State Apathy. The Government does not realize that its industrial and semiconductor policies with plush-officed investment promotion agencies, manned by fluently English speaking elite MBAs is useless. Serious Semiconductor Companies, many of whom are good friends (the fraternity is small) whom we approached for investment, candidly commented that if the fate met out to you, who invested put his money where one's mouth is has been a still-born, for lack of Govt. empathy and support, that too in amounts, which are paltry compared to Silicon Industry, we really so not see any sense in depending on state pleasantries. In this fact lies the kernel of failure of ‘Make in India’, ‘Assemble in India’, or ‘Service in India’ (that will be next slogan).

Apathy to our investment and project (http://www.dnsl.in) at all levels top to bottom has been shocking. Because industry-welcoming in India seems to be nothing more than a window dressing – the Government is running an advertising campaign for a service that does not exist!

I mourn not just the good money invested and idling, but the vision-stripped character of ours as a society. If all the support pleading emails, requests for appointments to make our case, written to each and every Secretaries, Cabinet Ministers, Departments in India are gathered in a book, it surely will be a 500 page ‘Book of State Apathy to strategic investments’. And that too in a sector which the Government touts at the most crucial after oil and gas.

India is standing on a platform, the train from which is already in motion and we are close to the last wagon. Either we jump on to the last boggy as a nation, state and society, else we will be a technological vassal.

THE WAY OUT

We are the only ones in Independent India’s history, who put their money where their mouth is & have a first-hand private sector experience of pitfalls & challenges of establishing semiconductor Fab in India.

• Economically, there is no need for Americans, Japanese, Koreans or Taiwanese to come and invest in India because labour is not a cost component of any consequence at all in Automated Semiconductor Manufacturing of current day and time. So cheap engineering labour advantage of India is diluted. Quite on the contrary India should be attracting talent globally, as we do not have the school of thought in material science.

• It is a strategic sector investment, US big-heartedness of transferring technology to East Asia made on assumption that they are not smart and inventive to surpass them has proved US wrong in case of China. US understands it created its own monster. They will not repeat the mistake for India. 

• Global EoI to establish Fab in India is good. But if one thinks strategically, why should I help my customer to become my competitor, while the customer has openly demonstrated that he has no capability to be a competitor on its own. Attitude would be very different, if I see that my customer is with his sound and creep business philosophy weaning away my customers to his small exclusive shop, while still buying bulk from me. So I cannot stop selling him bulk because he is a source of growing revenue, but I also clearly see that with time he will become my competitor. That is when I would decide to invest in my customer and be a part of him to avoid losing future profit even if the revenue subsequently is lost.

• Along with EOIs we need to do in private sector (Public accountability in tech is at cross purposes as tech today needs very fast & risk-driving both poisons to public sector) - Our first main purpose is technology. Silicon Fab is not viable, if not executed at scale. So we should first start a State-of-the-Art small unviable plant, which will not make economic sense, but the expenses will be affordable, and Govt. subsidizes all the losses. We can bring a consortium together which will be ready to invest in case Govt. bears the viability gap. Spend 3-4 years on honing our skills doing utterly cutting edge job of only piloting chip-manufacturing for the most advanced Companies in shortest duration and lowest cost to attract the best chip designers. Once we are sensibly established in this market, we make the next big push to create a global scale Fab. In 6 years we will be a force to reckon with. I would be ready to devout rest of my life to make it happen in India.

• Funding or subsidizing absolute technology is completely illogical.

Crux

1.         We will have to develop the semiconductor base in both Silicon & Compound Semiconductors by ourselves, by buying experts & small technology components abroad. There is no inductive logic for a foreign Company to construct and operate a Fab in India while it is much cheaper to expand existing which are anyways under-utilized.

2.         We will need to develop a precision engineering & specialty chemical industrial capability within India else, we will be hampered at the next stage – which no expert ever utters - we might be sanctioned (implicitly or explicitly) from buying sensitive capital equipment that enable State-of –the-Art technology development.

It is the hard way, but all other ways have yielded no result in last quarter century that India has been wanting to have a semiconfab here. And we see no logic in repeating the same approach that yielded no result in past.