TATA groups entry in semiconductor manufacturing industry

At present, 96% of the semiconductor supply chain is controlled by only 6 countries. Those are China, Taiwan, South Korea, Japan, Singapore and the United States. Currently, India doesn’t have the capability to compete with Japan and Singapore yet. The global chip shortage has created momentum to diversify chip supply chains and it is expected to last until 2024, so it’s essential that companies take precautions now to protect themselves from potential future shortages.

The Indian government is aiming to make India as a new hub for semiconductor technology, taking advantage of this current change. The ‘Make in India’ and ‘Atmanirbhar Bharat’ initiatives, which are aimed at making India self-reliant and boosting its economy. Likewise, the Indian government has organized the “SemiconIndia 2022” conference to address global demand in the semiconductor market and ensure that India can become a semiconductor hub of the future.

The purpose of “SemiconIndia 2022” conference was to motivate India’s chip manufacturers and invite international companies to invest in India’s semiconductor sector. To help companies gaining ground in India, the government created a mission to provide them with subsidies and benefits from the central government. So far, around six businesses from different parts of the country have already expressed interest in establishing operations. 

If India ensures a steady supply of chips, it will reduce the dependency on other countries for these components. When this happens, India could potentially become the go-to destination for tech manufacturers. Additionally, this will create new jobs and economic opportunities for Indians in the semiconductor industry.

TATA groups entry in semiconductor manufacturing industry

The TATA groups get into the race to develop India as the semiconductor hub of the future. Tata Group’s entry into the semiconductor manufacturing industry has sparked expectations of India becoming a leader in chip production.

The Tata Group is planning to start a semiconductor manufacturing industry in India, which could be a major step forward for the country’s technology sector.

Tata Group Chairperson Natarajan Chandrasekaran confirmed that Tata Group will “set up a semiconductor assembly testing business” under the Tata Electronics Private Limited (TEPL) company and plan to invest 90 billion USD in the semiconductor industry over the next 5 years.

TATA group appointed Mr.Raja Manickam as the CEO of Tata Electronics OSAT (Outsourced Semiconductor Assembly and Test) India in 2021. OSAT is also known as ATMP, which stands for assembly, testing, marking, and packaging units.

To start off, TATA plans on entering the semiconductor industry’s downstream side which includes assembly and packaging. To work on the upstream part of it, TATA need to partner with companies who have advanced technologies and capabilities.

This move will help them stay competitive in an ever-changing market landscape while also providing them with an opportunity to diversify their portfolio. Among the other domestic competitors, TATA is well placed to take on these challenges and have the advantage to do it successfully.

What are the causes of the worldwide semiconductor shortage?

       1) Covid-19 Pandemic

The global chip shortage is a consequence of the Covid-19 crisis, as production decreased due to lockdowns, lack of labor and logistics delays. Logistical issues such as limited air freight capacity and shipping delays have further exacerbated the issue. The Covid-19 pandemic had a greater impact on semiconductor suppliers in China, Taiwan, Japan, and the United States as a result supply of semiconductors also disrupted.

      2) Demand Increased

As a consequence of the pandemic, more people working remotely resulted in companies to purchase laptops, headphones, mics, and other consumer electronics, resulting in a boost in demand. The pandemic has caused a dramatic increase in the demand for products such as cellphones, laptops, and PCs. This has led to a shortage of chips, which are essential components in these devices.

      3) Auto Industry’s wrong prediction

In the first and second quarters of 2020, vehicle makers chose to call off orders of chips because they anticipated demand would be down due to COVID-19. Unexpectedly, IDMs were filled with orders right away by consumer electronics companies as their demand spiked. As soon as the auto industry’s demands shot back faster than expected, car makers had a deficit of chips quickly. This situation also made the global chip deficit more severe.