Exporting neon can put India on the map of semiconductor supply chain: NSAB’s Anshuman Tripathi

Anshuman Tripathi, member of the National Security Advisory Board

As India hustles to get its $10 billion semiconductor subsidy plan off the ground, the government is focused on microchips from an economic perspective — producing these would save India valuable forex and provide jobs to youth.

At the same time, semiconductor technology has become a geopolitical minefield.

The US was the first to fire a shot by curbing advanced semiconductor sales to Chinese companies. Since then, China has put export curbs on gallium and germanium, which are required to make compound semiconductors. Russia has done the same for important chip input materials like neon and helium.

It begs the question then, what is India’s thinking on semiconductors from a strategic perspective?

Anshuman Tripathi, a member of the Ajit Doval-led National Security Advisory Board (NSAB), tells Moneycontrol that from using neon as an entry point to the semiconductor value chain to building chips and designing them at secretive defence labs to power fighter jets, India’s national security apparatus has a plan as well.

Tripathi is a veteran in the tech industry with global consulting experience in defence, aerospace, semiconductors and public policy. He also sits on the board of SBICAP Ventures, the private equity arm of State Bank of India, as an independent director.

It appears that a large part of the government’s thinking behind the chip package is economic — semiconductor imports are expected to be neck and neck with oil imports as digitisation gathers greater pace over the next decade. Is there a strategic plan on chips as well?

Absolutely. You have to look at it from a larger historical context. India makes chips at the SCL facility in Mohali. We also make chips in various DRDO labs and fabs. When India was put under trade restrictions after the Pokhran nuclear test, our strategic sector continued to grow domestically.  We have and we shall continue to grow our supply chains from a national security perspective so that we continue to play a dominant role in international geopolitics.

In your discussion with government representatives from Japan, the US and Australia at Semicon India, you talked about neon gas as an entry point for India into the chip supply chain. Can you explain why neon is critical to the semiconductor supply chain?

In any chip design process, the most critical part is the lithographic process. There are only two companies in the world that make lithographic equipment — one is ASML in Holland and the other is Nikon in Japan.

All these technologies use a laser that has neon inside them. So, if there is no neon, there is no production of chips. It is so important that TSMC (the world’s largest producer of chips) has deputed a senior vice president level person to secure the pipeline of neon only.

How does India fit into the neon opportunity?

Neon is harvested from normal air. Normally, this is done in an air separation unit which is typically built for oxygen and nitrogen in blast furnaces for steel manufacturing. India is the second largest steel manufacturer. So, by default, we're the second-largest neon producer. But the problem is that neon has to be cleaned and purified to levels of purity so that the level of impurities is only a few particles per million or a few particles per billion.

Now, that purification step is what is called the last mile processing. That is the only step that India doesn't do. And once we do that, it can be bought straight as a raw material by all the fabs.

India’s efforts are currently directed at getting big global foundries to set up fab units for chip production in the country. How does supplying neon to other fabs help that aim?

We are trying to put up a fab. Fantastic. But then we also say that we don’t have an ecosystem.

Looking at a fab is one way, but we have to play to our strengths. If our strengths are on the raw material side, we should enter this game from the raw material side. If all the raw materials are here, the fab will come on its own.

Amid all the recent geopolitical tensions, the price of neon went up nine times or 900 percent in the international market. If anybody who originally made an air separation unit in India felt that economics was not right, they have to relook at that equation.

Is there a dossier that lays out our strategic plan on semiconductor technology?

Talking about the exact dossier and all is not the right way to go about it... India has a large military and we make our own fighter jets. Mind you, a fighter jet of all the military equipment is one of the most advanced ones as far as electronics is concerned. India is making light combat aircraft (LCA) and is going to make stealth-grade Advanced Medium Combat Aircraft (AMCA) very soon.

So, these will have a sizeable amount of semiconductors that are homegrown. Why? Because there are trade restrictions from the US and other countries to give us those technologies. We have very excellent teams in DRDO who are providing those chips. And I can see that there are a lot of proposals in the pipeline which are growing that footprint.

Talking about aircraft, two Indian domestic carriers — Air India and Indigo — have recently placed orders for almost 1,000 jets from Airbus and Boeing. Given we are placing such large orders, couldn’t there have been a rider to procure some advanced components like avionics domestically?

From what I understand, there are some components that are built and exported from India. And these planes are systems of systems… I come from that industry. So, I can tell you that there's a lot of work going on, and a lot of sourcing happening from India.

Why are domestic companies finding it difficult to get technology partners to set up chip fabs in the country?

It’s because only a handful of companies have the latest technologies. At the 3-4 nanometre level, there are four companies – TSMC, Samsung, Intel and SK Hynix. In the 28-40 nanometre range, there could be about 10 or 11 companies. And there are 30 companies at 180 nanometre.

That is why to mitigate risk, we have said the companies have to get a production-grade technology. My niece makes pizza at home and every time it tastes different. And then you have Domino’s which is making 200 pizzas which all taste the same whether you got it today or tomorrow, in India or America. That is what production-grade technology is. We want the Domino’s equivalent in semiconductors.

Last year, the government tweaked the chip incentive scheme to bring the subsidy for trailing edge nodes at par with advanced nodes. Will the demand for older generation nodes be sustained in the long term?

The demand will remain because it makes economic sense. The wafer cost of legacy innovators is much less than the wafer cost of three nanometres. There are a lot of lower-end products like LED drivers, which are built with one micron (i.e. 1,000 nanometre) because you want it to sell cheaply. That price you will not get if you do it with advanced nodes, and the advantages you get of smaller size and lower power are not sufficient trade-offs against pricing... So, a lot of IoT production will also continue to have legacy nodes.