India Can Only Dream of 3-5 nm Chips

Semiconductors are not an easy industry to crack. While the US and China race ahead with advanced 3-5 nm chip production, India still struggles to break ground. And despite the government’s renewed efforts, the country’s decades-old dream of joining the elite semicon club remains elusive. 

With giants like Taiwan Semiconductor Manufacturing Company (TSMC) establishing manufacturing in the US, and China reportedly making breakthroughs, the pressure on India is undeniable: Can India fast-track its capabilities to keep pace?

In the 2024–2025 interim Budget, the Indian government allocated ₹6,903 crore for the semiconductor sector, marking a substantial increase from the previous year’s allocation of ₹3,000 crore.

While India, capitalising on its strong semiconductor design ecosystem, continues to woo other semiconductor companies to the country, it could still be a few years away from tapping out a 3 nm, 4nm, or 5 nm chip. 

How’s the US Positioned?

The TSMC fabrication unit in Arizona, US, achieved a 4% better yield than the semiconductor giant’s manufacturing sites in Taiwan. This is a big development, considering the company has focused on keeping chip manufacturing within the country and controlling the global supply chain for decades.

However, TSMC has plans to expand to other locations, such as the US, Japan and even Germany. According to reports, the new fabrication unit in Arizona, which produces 3nm and 4nm chips, will develop Apple A16 chips in the US. Additionally, AMD plans to manufacture its AI high-performance chips (HPC) at this facility in Arizona.

This is a significant win for the US because establishing manufacturing facilities on American soil will reduce its reliance on foreign suppliers and enhance self-sufficiency, ensuring that the country is less vulnerable to supply-chain crises.

China, too, Makes Progress

Similarly, Chinese tech giant Xiaomi has reportedly developed a 3 nm chip. This is considerable progress given that the US has tried to limit China’s advancement in the semiconductor space in the past.

ASML, the only company in the world that develops the machines to produce these advanced chips, is forbidden from selling its machines to China. Tapping out a 3 nm chip without ASML machines could potentially be one of the biggest technological breakthroughs for China in this century.

However, the report originates from Chinese local media and must be viewed with some scepticism. This isn’t an isolated incident; numerous reports have surfaced over the years regarding China’s progress in the semiconductor space.

Last year, reports suggested that Huawei, another Chinese tech giant, had made a significant breakthrough in developing advanced GPUs to compete with NVIDIA.

During the same period, China also unveiled a new phone powered by a 7 nm processor developed locally. The Huawei Mate smartphone is powered by the Kirin 9000s processor, which was developed by the state-owned Semiconductor Manufacturing International Corp (SMIC).

However, the efficiency of these chips has come into question. Last year, the Chinese government claimed that there exists a gap between the countries’ capabilities compared to other ‘advanced levels of foreign countries’.

These developments also don’t necessarily imply that China is on the path to becoming self-sufficient, but they are important developments nonetheless, at least compared to India.

Earlier this month, controversy erupted when tech research firm TechInsights found that Huawei’s Ascend 910B smartphones were actually powered by TSMC-made chips. Notably, US sanctions on China restrict TSMC from manufacturing chips for Chinese companies. 

After this, TSMC suspended shipments to China-based chip designer Sophgo, the company that ordered chips from TSMC that matched the one found on Huawei’s Ascend 910B. Sophgo has denied these allegations.

Is India’s Progress Too Slow?

Nonetheless, India has made a few significant strides over the past few years. Earlier this year, Tata Electronics partnered with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) to build India’s first fabrication unit in Dholera, Gujarat.

Besides, a few packaging and assembling plants have also been announced in Gujarat and Assam. The Tata-PSMC fabrication unit will produce chips using the 28 nm, 40 nm, 55 nm, 90 nm, and 110 nm nodes technology. 

These node sizes are considered mature and are widely used for various applications, including automotive electronics, consumer electronics, and industrial applications. 

Arun Mamphazy, a semiconductor analyst, told AIM that any node between 10-90 should be a good start for India, given that the country is trying to bolster its electronic manufacturing capabilities.

“It’s crucial that we begin rather than engage in an endless debate over the best starting point. India really does not have much of a choice in this. If we are getting 40 nm chips, we should start and advance from there,” he said.

Interestingly, reports also suggest that the Dholera plant has commenced the development of a 14nm node technology. These chips could be used for low-end tablets, laptops and even smartphones. 

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