What’s the news?

• Moody’s report has brought to light a critical factor that could disrupt India’s semiconductor aspirations: climate change.

Central idea

• In December 2021, the Indian government launched the Semicon India Programme, allocating a substantial budget of Rs 76,000 crore for the development of a domestic semiconductor manufacturing ecosystem. While this initiative aimed to position India as a prominent player in the global semiconductor market, it faces multifaceted challenges, as highlighted in a recent report by Moody’s, a global rating firm.

Challenges highlighted in the Moody’s report

• Climate Change Risks: The report points out that climate change can lead to damage to manufacturing facilities, disruptions in supply chains, and substantial financial losses in the semiconductor industry, potentially deterring investments.
• Environmental Footprint: The semiconductor industry’s substantial environmental footprint is a challenge, with chip fabrication plants consuming large amounts of water, generating hazardous waste, and contributing significantly to greenhouse gas emissions.
• Competitive Landscape: India’s emerging semiconductor sector faces competition from established global players who are already taking steps towards sustainability, making it essential for Indian semiconductor units to adopt sustainable practices to remain competitive.

The Significance of Semiconductors

• Technological Advancement: Semiconductors are the bedrock of technological progress, enabling innovations across industries. They underpin the development of advanced electronic devices, leading to continuous improvements in efficiency, performance, and functionality.
• Information Processing: Semiconductors power the microprocessors and memory chips found in computers, smartphones, and digital gadgets. This processing capacity drives data analysis, artificial intelligence, and complex computations.
• Consumer Electronics: Nearly all consumer electronic devices, from televisions to household appliances, incorporate semiconductors. These components enhance functionality, making these devices more user-friendly and efficient.
• Clean Energy: Semiconductors are vital for renewable energy sources. They enable efficient energy conversion and management in solar panels, wind turbines, and energy storage systems, promoting clean and sustainable energy solutions.
• Healthcare Revolution: In the healthcare sector, semiconductors are crucial for medical imaging, diagnostic equipment, and wearable health monitoring devices. They empower healthcare professionals with accurate data for improved patient care.
• National Security: Semiconductors are indispensable for defense and security applications, including radar systems, encryption technology, and surveillance equipment. They ensure the reliability and security of vital systems.
• Space Exploration: Semiconductors are vital for space missions and satellite technology. They enable data collection, communication with Earth, and the operation of instruments, advancing humanity’s understanding of the cosmos.
• Environmental Monitoring: Semiconductors are used in environmental monitoring systems, aiding efforts to assess and mitigate environmental issues such as air and water quality, climate change, and pollution.

Industry Initiatives Toward Sustainability

• Taiwan’s Semiconductor Manufacturing Company (TSMC): TSMC, one of the world’s largest chip manufacturers and a key supplier to tech giants like Apple, has taken a significant step by pledging to achieve net-zero emissions by 2050. This commitment reflects a proactive approach to reducing the environmental impact of semiconductor manufacturing.
• Samsung and Intel: The article also notes that companies like Samsung and Intel, along with several European semiconductor firms, have reportedly started conducting greenhouse gas (GHG) audits. These audits are essential for understanding and quantifying the industry’s carbon footprint, with the goal of identifying areas for improvement.

India’s Greenfield Advantage

• Clean Slate: India’s semiconductor industry has the advantage of starting from a relatively clean slate. Unlike established semiconductor hubs that may have legacy issues, India’s greenfield centers can begin their operations with a fresh perspective and without the burden of historical environmental challenges.
• Learning Opportunity: These greenfield centers in India can learn from the experiences of semiconductor companies in other parts of the world. They have the opportunity to incorporate global best practices right from the outset, making sustainability and environmental responsibility integral to their operations.
• Smart City Programme: Many of India’s semiconductor hubs are planned as part of the government’s Smart City Programme. This planning approach involves creating modern, sustainable urban environments. As a result, these townships are more likely to incorporate eco-friendly and climate-resilient infrastructure and drainage systems.
• Preventing Disruptions: The greenfield centers should prioritize strategies to prevent disruptions during extreme rainfall events. This proactive approach is important, considering the potential impacts of climate change, which can lead to increased rainfall and extreme weather events.

Way forward

• Learning from Global Best Practices: By learning from the experiences of established global players and incorporating best practices from the outset, Indian semiconductor units can enhance their sustainability quotient.
• Regional Considerations: The government’s vision of establishing Dholera in Ahmedabad as a chip-making hub should be attuned to regional climate factors. Climate change is expected to exacerbate heat-related stresses in the region, making it crucial to factor in climate-resilient infrastructure.
• Government Intervention: In light of Moody’s report, it is evident that the government must play a pivotal role in supporting the semiconductor industry. This includes investment in climate-resilient infrastructure, providing guidance to the industry, and encouraging semiconductor units to adopt sustainable practices.

Conclusion

• The Semicon India Programme holds the potential to propel India into the ranks of global semiconductor manufacturing leaders. However, this ambitious endeavor faces significant challenges, with climate change posing a formidable threat to its success. By taking proactive measures, India can navigate the treacherous waters of climate change and move closer to realizing its dream of becoming a chip-manufacturing hub.

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