Have you ever wondered why not a single Indian brand of smartphones can’t be found while shopping at an electronic store?
It seems quite perplexing since India is the world’s second-largest producer of mobile devices.
One of the greatest success stories of the esteemed “Make in India” campaign: to become the world leader in smartphone manufacturing was achieved after great efforts by the government.
But ‘manufacturing’ is a little misleading because we do not actually make the critical components here; they are just imported and assembled for other brands like Oppo, Vivo and Xiaomi.
The top Chinese brands have total dominance over 70% of India’s smartphone market with the rest being shared by Apple and Samsung.
Samsung recently opened its largest manufacturing facility in Noida and Foxconn started production of high-end iPhones in Tamil Nadu. Admittedly, this is great for FDI and the economy in general but it still begs the question to be asked: Why isn’t there an Indian smartphone brand that is completely indigenous?
To understand why, it’s important to delve into the technical details of the device. The most vital component of a smartphone or any other computing device for that matter is the Processor or Integrated Chip (IC). Chip technology is incredibly intricate and subtle – it performs billions of mathematical functions and operations within a fraction of a second to execute commands.
The chip is the brain of the device. If you can efficiently make an advanced chip, then you have successfully done 90% of the task when it comes to making a good quality smartphone.
But producing a chip is extremely time-consuming, requires precision, technical know-how and cutting-edge industrial potential and capabilities.
In a nutshell, this is how an Intel chip is created-
Silicon- Silica sand which contains silicon dioxide is the base material for semiconductor manufacturing. It has to be 99.999% pure, a level that can only be achieved with the most precise and meticulous technology.
Silicon Ingot- Silicon is purified, melted, and cooled to form an ingot, which is then sliced into discs called wafers. Chips are built simultaneously in a grid formation on the wafer surface in a fabrication facility or “fab.”
Photolithography- The most precise and delicate aspect of the circuit is forming patterns on wafers; lines which are less than 10 nm in dimension are etched with laser on the photoresist material at ultra-fast speeds. To give a perspective of how sophisticated this step is, imagine splitting a fine strand of a single human hair 100 times in terms of width within a millisecond.
ASML, a Netherlands-based company is the world leader in microchip manufacturing and controls over 85% of the market share. They have a complete monopoly over the highly advanced Lithography machines without which making an Integrated chip is absolutely impossible. Taiwan Semiconductor Manufacturing Company (TSMC), Apple’s primary contractor and the world’s most valuable semiconductor company exclusively buys these machines from ASML. Qualcomm which leads the chipset segment in Android gadgets also purchases Lithography machines from them each year.
If you have an android phone, there’s a 90% possibility of your device’s chip being made on an ASML machine and if it’s an iPhone, it is 100%.
If you might be wondering how many such machines Indian manufactures own, the answer is nil. The cost of a single unit of an ASML Extreme Ultraviolet Lithography (EUV) machine is more than $100 million. But that’s just one machine that takes care of only one part of the process, albeit the most important.
Along with this investment, the production laboratories have to actually be the cleanest places on earth having fewer than ten particles of dust (10 microns or smaller) occupy every cubic meter of air because of how risky the process is. Power supply, maintenance, super high-skilled technicians and scientists and R&D labs make the operating costs unfathomable.
The cumulative expenses incurred to set up an entire Semiconductor Fabrication Facility will easily exceed 10 billion dollars or the cost of India’s entire order of 36 Rafale jets which will still leave a couple billion dollars lying around. The figure is mind-boggling and sufficient by itself to demotivate any major hardware industry in India from even venturing into the business of semiconductor manufacturing.
Addressing the dragon in the room, China doesn’t shy away from investing billions when it comes to technology that’s used by everyone universally. After the Made in China 2025 policy which was announced in 2015, China invested more than $300 billion to become a high-end producer of such equipment. As per sources, China has more than 7 factories for semiconductor manufacturing; each having about 50 ASML EUV/DUV machines.
Another option could be making these advanced Lithography machines locally to avoid the skyrocketing costs of procurement by reverse engineering it. To achieve the resolution of an ASML Photolitho machine, a robust team researchers well-versed with high-tech optics, PhD level physics and a suitable research environment that is backed by heavy government spending on R&D, ensuring a proper economic ecosystem, reskilling and upskilling of labour and having a world class supply chain. It took 25 years for Netherlands to reach this stage where they can rightfully be called World Leaders in Chipset production.
Though there have been some efforts in this direction, a strong political will is gravely lacking. Interestingly, on the BJP 2019 manifesto, it is stated “We will promote local manufacturing of ICs” but there is little to none inclination of the Government in that direction. A consortium led by Hindustan Semiconductor Manufacturing Corporation (HSMC) planned to set up a 30,000-crore chipset fabrication unit in Gujarat, but their permit got rejected due to lack of legal and regulatory clearances.
Indians globally are contributing to the development of such high-grade tech but not much in India. Our premier institutes need to promote a culture that is driven by innovation and ingenuity. It must be realized that to be Atmanirbhar, a solid manufacturing infrastructure (and not simply assembly of critical parts and components) is the need of the hour.
Hope a time comes when you would see an Indian brand of smartphones competing with Apple and Samsung.
Sandip Kumar, Mechanical Engineer at ASML
Author: Gaurav Gupta