Naandika covers startups, tech, corporate and human interest stories. She holds a postgraduate degree from Indian Institute of Journalism and New Media (IIJNM, Bangalore), with specialisation in Business and Investigative journalism. Apart from writing for the magazine, Naandika also handles social media, events and the Blogs section on forbesindia.com. Outside of work, you will find her traveling and exploring new places, volunteering for NGOs, rescuing animals, and mostly spending time around them.
The five-decade-old US-based Advanced Micro Devices (AMD) has been operating in India for over 20 years. At the recent Semicon India conference, the semiconductor company announced a $400 million investment over the next five years to expand its research, development and operations in India. The planned investment includes a new AMD campus in Bengaluru that will serve as the company’s largest design centre in the world. Last February, the company purchased adaptive chip company Xilinx for $49 billion, which is reportedly one of the biggest semiconductor acquisitions in history. In an exclusive conversation with Forbes India, Mark Papermaster, chief technology officer, AMD, who has four decades of experience in the semiconductor industry, talks about India’s approach to chip-making, the investment it takes to build a fab, and more. Edited excerpts:
Q. The recent chip shortage highlighted the problems of overseas dependency, especially amid continued tension between China and Taiwan. What lessons did AMD learn from this? Well, when you think about what happened during the pandemic, there was really a surge in demand for electronics because of what happened to the population. Everybody had to work remotely. And so, all industries needed to adjust this literally overnight. It created a huge surge, which in turn created a rush on the electronics that were needed. Industries ranging from automobiles to electronics had shortfalls. So, I think when you look at the lessons learnt, it's really about anticipating demand better and making sure you have reserve stockpiles to buffer when there might be a surge in demand. We did a pretty good job of that during the pandemic. We did have supply shortfalls. But AMD was affected less than other companies.
In general, the semiconductor industry goes through cycles of supply and demand. But usually, it does not result in severe shortages, as we've experienced during the pandemic. That was highly unusual. There's a lot to learn, particularly in certain industries like automotive, where they did not have enough reserve banks to build ahead. So, they learnt that lesson, and they'll build ahead. But usually, the industry is experienced in how to accommodate the cycles of supply and demand and have buffer stock.
Q. Which countries have end-to-end chip-making capabilities, and how long will it take for India to reach that level?
The US, Taiwan and Europe have end-to-end chip-manufacturing capabilities today. It's exciting to see what Prime Minister Narendra Modi announced. The Make in India incentives are very strong, and they will add India to the list of countries that really have end-to-end capabilities. But it takes time to look at anyone who has that type of capability. They've developed it over decades.
Q. In a layman's language, how would you describe semiconductors?
When you think about what semiconductors are used for, they're all around us every day, and most people don't think about them. But semiconductors are the basic electronics that make your devices smart. If you have a smart refrigerator, you have your PC all the way to the biggest computers. They're smart devices because the semiconductors control the circuitry. So, it's a very low-power device. It's actually glass, the last material, on which you imprint circuitry patterns that allow you to put logic and functions that then allow you to have that smart device or computer. So, it impacts all of us every day.
Q. How has the semiconductor industry evolved over the years?
The semiconductor industry is really amazing because it's so innovative. People have projected many times over the last 50 years that, oh, we're at a stop. There's no way that these semiconductors can keep improving, keep getting more and more capable, and produce less and less power. Yet innovation rules today, every time. I've seen the devices continue to shrink. It's called Moore's law. We're used to shrinking and allowing almost a doubling of the transistors every 18 to 24 months. And even now, when Moore's law is slowing, we don't get all the same benefits that we used to get… innovation still rules. And we're figuring out ways to put them together differently. Like we've done at AMD with chiplets, where we break them up and make them more modular. It's really exciting.
Q. AMD has designs and tests chips, but no fabs. Why did AMD halt in-house manufacturing? Which companies is AMD reliant on for chip manufacturing?
AMD had fabs for many years. There was a time when that was very important because the only way you could have competitive devices, competitive computer chips was to have your own fab. And so, at the time, that was the right thing to do. But what happened was the development of really outsourced semiconductor facilities that focus on one thing, and that's making the world's best fab for semiconductor manufacturing. And you have someone who focuses on that and brings many customers in—not just one customer, but many customers. Chips are made on wafers. You dice them up to get these chips. And with many customers, they can create a very high volume of manufacturing, and they can perfect the processes. So, with that, AMD did not need to have its own fab, it could leverage these manufacturers that were absolute experts in making semiconductor wafers.
We've always been multi-fab. Today, Taiwan Semiconductor Manufacturing Company is our major partner. But we have other fabs too—like GlobalFoundries and Samsung in Korea—and we work with them on many different levels.
Also, the amount of investment it takes to build a fab is tens of billions of US dollars. The only way to make it economical is to have a very large customer base and high throughput. It's not economical for most companies to develop their own fab. You really want to have a fab that can accommodate multiple customers, fill that fab, and have a strong economic return.
Q. What should India's step-by-step approach to eventual chip-making be?
I think what we're starting to see now is the Production-Linked Incentive scheme… the incentive to bring manufacturing to India. I think it will go from the assembly of devices—like you saw the announcement of Foxconn, Apple and others who are bringing a more finished product assembly, and then it will probably start working on high-volume components, and as that goes on, those assemblies will start to be manufactured there. And then I would expect packaging because it's less capital-intensive to create that type of packaging to put all the chips together. And then, of course, the most capital-intensive in the largest infrastructure dependency is the fab itself of the semiconductor wafers. These incentives will pull companies in. And again, we rely on others for manufacturing. So, we're certainly supportive of seeing progress in this area.