India will soon have its own Fabs to compete against China

Published  February 14, 2024   0
Eswara Rao Nandam, Founder & CEO, Polymatech

In an effort to boost the semiconductor industry of India, the incentive scheme of Rs 76,000 Crore was unleashed back in December 2021. Apart from this, the finance minister allocated Rs 3,000 crore in the budget session of FY 2023-24 and this year the amount has been increased to Rs 6,903 Crore. This move is an escalation of more than 200 percent in regards to semiconductor and display manufacturing. Speaking of the growth, the government and the industry bodies are looking for $55 billion by the end of 2026 and $110 billion by 2030. But, at this moment, Micron’s application is only approved and rest, all the proposals are yet to be considered. The industry is also dealing with various challenges such as lack of skilled labor force, major equipment is being imported, and experts feel that India needs to do chip design for the country as it is mostly done for other nations. In this regard, we spoke exclusively with Eswara Rao Nandam, Founder & CEO, Polymatech about the industry’s growth in India in the coming five years, the solutions required to deal with the challenges, and the type of semiconductors India can manufacture for itself and for other nations in the coming years.

Q. Do you think India is now on the right track to boost its semiconductor manufacturing ecosystem? Speaking of globally, where is the major challenge the country is facing and how Polymatech is tackling those impediments?

For mass production of semiconductors, countries such as Europe and the US have outsourced it to other countries such as China and Taiwan. When you speak of the largest semiconductor manufacturing unit, TSMC is the leader as it has the world’s largest foundry. And it serves various countries. The research and developments are happening in EU nations and in the USA, but their products are manufactured in other countries where they have outsourced it. India now has the biggest opportunity for all these American and EU nations to set-up their mass production units. 

My personal view is that no companies should take government subsidies into their business operations, and they should not be taken into consideration. At Polymatech, our policy is we will not apply for any government subsidy and scheme and focus only on our production at large-scale. The government must support the industry in terms of electricity, and it must be subsidized. It is one of the key requirements in any semiconductor operation because clean rooms need to be maintained. The clean rooms require uninterrupted quality power because temperature and humidity in the rooms must be perfectly balanced. Govt of India’s support is also required as they need to reduce the customs duty because a lot of materials are still imported and pass through customs. In the semiconductor industry, everybody thinks that it is mostly silicon. I must tell you that it is an outdated technology and Polymatech is doing semiconductors on sapphire. The efficiency is very high, and the transmission of data is very fast. 

Semiconductor Industry

Q. During COVID, the chip industry suffered a huge setback, production reduced, and it is still failing to meet the demand of other industries. In this regard, do you think the chip industry will return to normalcy?

See, there are various industrial verticals where semiconductors were not used at all previously. In the past few years, the utilization has increased and therefore, the demand has soared. To meet the demand of a new business is a challenging task. The growth has already started and many companies have already started coming back to normalcy. But, the companies associated with the packaging industry have mostly suffered mostly from COVID. Semiconductor is a huge industry and in this ecosystem, Polymatech is focusing on Opto-semiconductors, which work by absorption and emissions of light. Every semiconductor deals with some specific verticals. There are many companies both global and Indian that are showing interest and are willing to invest in this ecosystem. My personal opinion is that by the end of 2025, fabs will be set-up in India and we will be in a position to compete with China in this industry. By 2030, India will be the global hub for this ecosystem.

Q. Why was Polymatech founded and what is your current mission and vision? How have you changed your strategies over the years?

Polymatech is basically a Japanese company and initially, it came to India to manufacture keypads for Sony Ericsson and Nokia. When the Fukushima nuclear incident happened, the company suffered financial losses and its global operations were fully sold. Polymatech Co Japan Incorporated daughter Company “Polymatech Electronics Private Limited, Oragadam, Kancheepuram, TN, India” with Polymatech Company Limited Japan having 51 percent share and Polymatech (Malaysia)having percent. Back on December 12, 2019, we released our first invoice. Our technology is 100 percent home grown and we haven’t borrowed it from anywhere. 

Polymatech - Product Image

During the first six months of COVID, we haven’t stopped working and developed our next products. Currently, we have 20 products in-hand and next 80 is on the final stage of development. In the past four years, we have invested around Rs 500 crores into the equipment. By the end of 2026, we will be investing around Rs 8000 Crores and our mission is to grow worth Rs 80,000 crores. In the first two verticals of this ecosystem, lab work is already completed, and we are doing forward integration. Our plan is to produce 20 billion chips in India and today, the installed capacity is 2 billion chips. We have applied to SEBI for IPO about Rs 720 crore, and the entire money will be spent into the purchase of machinery only. When we have our latest machines, we will have a capacity of 10 billion chips from the current 2 billion. 

Q. Why are you focusing mostly on Sapphire based semiconductors and why is it so unique? What is the kind of new technologies you would like to deploy in your manufacturing plant?

Sapphire wafers are the art of the day, and it is highly efficient. The thermal conductivity is very fast here and therefore, the heat dissipation is very fast. Ultimately, the data transmission is also very fast because of this process. Today, the heating of products has gone down. In our manufacturing unit, we have truly deployed industry 5.0 where 90 percent of work is fully automated. We have manpower only on the shopfloor. All our machines are fully automated, and robot based. For at least 18 to 20 hours, there is no need to go and check the machines. In the first three phases of the semiconductor industry, there will be no manpower required because the chips are so minute, it is not an easy task for a human to do it. But, when the product is on the assembly stage, a lot of manpower is required because a lot of components and PCBs are integrated. Whenever there is a revolution in the industry, the notion is people will lose jobs, but the reality is that it creates a door of new opportunities for the skilled people to showcase their talents.