India receives 100% technology transfer from the US for Shakti Semiconductor Fab

India and the US have signed a major agreement on semiconductor manufacturing. The deal between the US Space Force, Bharat Semi and 3rdiTech guarantees India 100 percent technology transfer for the production of compound semiconductors. Sources familiar with the agreement say that all the necessary agreements for the technology transfer are in place.

The manufacturing unit set up under the US-India partnership is likely to be called Shakti and will manufacture chips that meet the national security requirements of India and the US. According to government officials, the semiconductors manufactured here can be used in high-tech defense equipment, railways, electric vehicles and smart toll systems. CNBC-TV18 has learnt that this manufacturing unit is likely to come up in Jewar, Uttar Pradesh, but an official confirmation is yet to be made.

In an exclusive interview with CNBC-TV18, Vrinda Kapoor, CEO of 3rdiTech, said her company hopes to start construction in the first quarter of next year and begin production in three years.

“We hope to start the first phase of production of 50,000 semiconductors per year within three years. The first objective is to fill the gaps in the supply of semiconductors to the Indian armed forces. In phase 2, we may look at exports,” she said.

What type of semiconductors will Shakti Fab produce?

The production unit will mainly produce infrared, gallium nitride and silicon carbide semiconductors. While conventional semiconductors use one material, namely silicon, compound semiconductors are made of two or more materials. 80 percent of semiconductors worldwide use silicon.

Twenty percent of semiconductors worldwide are compound semiconductors. Compound semiconductors can handle more power than silicon semiconductors, are 100 times faster, and are better at detecting and emitting light.

Therefore, they are used in surveillance cameras, jammers, night vision devices, electric cars, solar panels, spacecraft, sensors, inverters, fighter aircraft, military communications and radars. 80 percent of the world’s semiconductors use silicon. 20 percent of the world’s semiconductors are compound semiconductors.

According to industry experts, manufacturing compound semiconductors is a complex technology and without technology transfer, it would be difficult to manufacture them in India. According to government sources, the collaboration between the US military, Bharat Semi and 3rdiTech would make India one of the few countries in the Indo-Pacific, along with China, capable of manufacturing these complex compound semiconductors.

How much would the investment be for the Shakti Fab?

According to industry experts, setting up a compound semiconductor manufacturing unit would cost less than $500 million. While the US Space Force is the technology partner, investments would come from Bharat Semi and 3rdiTech. The company would also receive financial support from the Indian Semiconductor Mission as per the set criteria.

What do Bharat Semi and 3rdiTech do?

Bharat Semi is the holding company of 3rdiTech. While 3rdiTech specializes in design, Bharat Semi is the manufacturing arm. The company has been working on projects with the US military for the past five years. Vrinda Kapoor, Vinayak Dalmia and Mukul Sarkar are the founders of Bharat Semi, a company they incubated at IIT Delhi in 2018. Vrinda Kapoor, CEO and co-founder, attended a key CEO roundtable event at the White House last year during Prime Minister Modi’s visit to the United States.

Who will Bharat Semi and 3rdiTech sell compound semiconductors to?

According to sources, the company’s first task will be to support the needs of the Ministry of Defence. The Indian government will be the first customer of the compound semiconductors manufactured in this manufacturing unit. Currently, India imports compound semiconductors worth a billion dollars annually for defence purposes. Therefore, the new manufacturing unit could lead to import substitution and self-reliance for India in three years.

Can India export these chips?

According to sources, in the future, Bharat Semi and 3rdiTech will consider exporting these chips to the US and other countries. Apart from defence applications, the company is also likely to consider selling semiconductors to electric vehicle makers, 5G and 6G applications and other technology sectors. However, in the first phase, supply of semiconductors to meet the needs of the Indian armed forces would be a priority.

This agreement has been described as a turning point in India-US relations and the success of this collaboration could open up further opportunities for cooperation between the two countries.