India's First 5G Chip Faces Funding and Production Challenges

1. In December, 2024, India’s first-ever indigenous 5G and Internet of Things (IoT) chip, designed by WiSig Networks (a startup supported by IIT Hyderabad), is facing significant difficulties in moving from prototype to mass production.
2. Although this chip is a major step for India’s semiconductor industry, the Narrow Band IoT (NB-IoT) chip has encountered funding issues and low commercial orders, preventing it from scaling up and meeting market demand.
3. This chip, created mainly for smart meters used in the electricity distribution sector, has received close to Rs 45 crore in funding from the Indian government.
4. However, it still faces challenges in attracting commercial orders and completing the final stages of production.

Key Features of the Indigenous 5G Chip:

1. The NB-IoT chip was designed by WiSig Networks in collaboration with Cyient (a Hyderabad-based engineering company), and fabricated using Taiwan Semiconductor Manufacturing Company's (TSMC) 40-nanometre process.
2. It is a System on Chip (SoC) and the first 3GPP-compliant modem SoC to be indigenously designed and successfully tested in India.
3. The chip has undergone several tapeout processes, which involve the final stages of chip design, resulting in the production of hundreds of chips that have completed 3GPP-compliant testing. Testing on Reliance Jio's NB-IoT network is also ongoing at the IIT Hyderabad campus.
4. The Indian government's Department of Telecommunications (DoT) allocated Rs 40 crore for two chip revisions and an additional Rs 5 crore for refining the third version of the chip (the Rev 3 tapeout).
5. The IT Ministry has further allocated Rs 13 crore to extend the chip's functionality for satellite connectivity.
6. The chip is primarily targeted for use in smart meters within the electricity distribution sector, which would allow for remote monitoring and data collection.

Challenges Faced by the 5G Chip Project:

1. Despite successful design and testing, the chip faces mass production challenges. A 12,000-unit production tapeout is required, which is crucial for commercial-scale manufacturing.
2. The chip also requires the development of a production test program to ensure that it meets commercial standards.
3. However, WiSig Networks has reported a shortage of funds and is struggling to secure sufficient commercial orders to complete these activities.
4. A major bottleneck for WiSig Networks is the low commercial uptake of the chip. Without sufficient demand for the chip, the company cannot justify further investments in mass production.
5. The company is still in the customer evaluation phase, and it cannot proceed with full-scale production until orders are confirmed.

Government's Policy Interventions to Boost Commercial Uptake:

1. Smart Meter Procurement:

   1. The Ministry of Power is exploring policy measures to encourage the procurement of domestically designed smart meters by electricity distribution companies (discoms).
   2. This could include mandating that a certain percentage of smart meters use locally designed chips, such as the WiSig chip.

2. Design-Linked Manufacturing Scheme:

   1. The IT Ministry is considering the introduction of a Design-Linked Manufacturing (DLM) scheme, which would provide support to Indian-made smart meters that use domestically designed chips.
   2. This would further promote the use of locally designed technology in critical infrastructure.

India's Push for an Indigenous Semiconductor Ecosystem:

1. India is keen to develop a self-reliant semiconductor ecosystem, where domestic companies hold intellectual property (IP) for chip design. Chip design is considered a crucial aspect of the semiconductor value chain, requiring years of sustained research and funding.
2. Having domestic chip-making capabilities is also viewed as a strategic advantage, allowing India to prescribe the use of indigenously designed chips in sensitive sectors like defense and telecommunications.
3. The Indian government launched the Design Linked Incentive (DLI) scheme as part of a broader $10 billion incentive program for the semiconductor ecosystem, which was rolled out in December 2021.
4. The DLI scheme provides financial incentives and infrastructure support to domestic companies working on semiconductor design, including chips for integrated circuits, chipsets, and System on Chips (SoCs).
5. As of September 2024, the IT Ministry has approved proposals from 12 Indian startups under the DLI scheme, committing more than Rs 130 crore to their projects, which cover a range of applications, from telecommunications to AI hardware accelerators.
6. The run rate of the DLI scheme has been slower than expected, with the government initially projecting support for 100 startups over a 5-year period (around 20 startups per year). As of now, only a fraction of this target has been met.

Conclusion:

The WiSig Networks' 5G chip represents a significant milestone in India's efforts to build a self-reliant semiconductor industry. However, the project is currently facing financial constraints and a lack of commercial orders, which are hindering its ability to scale production. While the government has provided substantial funding through various schemes like the DLI, more policy interventions are needed to boost the commercial uptake of domestically designed chips. India’s ambitions to become a global leader in semiconductor design and manufacturing will depend on overcoming these initial challenges and fostering a more vibrant ecosystem for innovation and production.

 

Semiconductor Industry What are Semiconductors? Semiconductors are materials that have electrical conductivity between that of conductors (good conductors of electricity and heat) and insulators (poor conductors of electricity and heat). Materials: Pure elements: Silicon (second most abundant element in Earth's crust) and Germanium. Compounds: Gallium Arsenide, Cadmium Selenide. Role in Technology: Semiconductors form the foundation of modern electronics, enabling the creation of intricate circuits in devices that power our digital world. Processes Involved in Semiconductor Chip Industry The process of turning silicon into functional semiconductor chips involves several complex stages, often taking up to three months. Preparation of Silicon Wafers: Silicon is extracted from sand (Silicon dioxide), melted, crystallized into rods, and sliced into thin wafers. Polishing: Wafers are polished to remove defects and ensure a smooth surface. Oxidation: Oxygen or water vapor is applied to create a protective oxide layer on the wafers, ensuring desired conductivity. Photolithography: Circuit patterns are transferred onto the wafers using precision laser light. Etching: Unwanted materials are removed through wet or dry etching, leaving the circuit design. Ion Implantation: Impurities and thin film coatings are added to adjust the semiconductor’s conductivity. Metal Wiring: Conductive paths (metal wiring) are created using materials like aluminum or tungsten for electricity flow. Energy Dispersive Spectroscopy: Tests and inspects chips to identify and discard defective ones. Cutting and Packaging: Wafers are cut into individual chips, which are then mounted on Printed Circuit Boards (PCBs). Major Centers of Semiconductor Manufacturing in the World East Asia: Taiwan (TSMC), South Korea (Samsung), and China (NAURA Technology) dominate, accounting for over 70% of global semiconductor production. United States: Major players in chip design and research include Intel and Qualcomm. Europe: Germany and Netherlands focus on specialized chips, particularly for automotive applications. Taiwan’s Dominance in the Semiconductor Industry Taiwan has become a global leader in semiconductor production, especially in integrated circuits and microprocessors. Key Factors for Taiwan's Success: Early Recognition: Taiwan’s government invested in semiconductor R&D during the 1970s, creating a foundation for growth. Strategic Diplomacy: Taiwan used its semiconductor strength to form global alliances, ensuring a conflict-free environment. TSMC: The establishment of Taiwan Semiconductor Manufacturing Company (TSMC) and other companies helped establish Taiwan as the world's semiconductor hub. Continuous Innovation: Ongoing focus on miniaturization and improving processing power keeps Taiwan competitive in the semiconductor industry. Implications of Taiwan’s Dominance Chokepoints: TSMC manufactures the majority of the world's chips. It relies on Dutch machinery for chip production and supplies chips primarily to companies like NVIDIA (USA). This creates potential chokepoints in the global supply chain. Vulnerable Supply Chain: Any disruption in Taiwan’s semiconductor production could lead to a global tech meltdown, affecting industries ranging from AI to healthcare and automobiles. Geopolitics: Taiwan’s geographic location places it at the center of geopolitical tensions, particularly between the US and China, who are vying for dominance in the semiconductor sector. Key Facts About the Semiconductor Industry Global Market Size: Expected to reach USD 681.05 billion by 2024. Indian Semiconductor Market: USD 34.3 billion in 2023. Top Semiconductor Producers: Taiwan, South Korea, USA, China. Top Semiconductor Consumers: China, USA, Taiwan, South Korea.

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