Tata and ASML join hands, it is a big deal for India's silicon chip dreams

On Saturday, Tata Electronics announced an agreement with Dutch tech giant ASML. The two companies will work closely to create 300mm wafers in India. On the face of it, the deal doesn't sound much. But its significance lies in how ASML can potentially enable India's silicon chip dreams.

In Short

• Tata Electronics signs agreement with Dutch giant ASML
• ASML to help Tata in making Dholera fab a commercial success
• ASML is arguably the world’s most important company

In the last few days, if you looked at TV news, or a business paper, you must have come across an acronym. ASML. This Dutch tech giant has entered into a partnership with Tata Electronics. ASML is a company that is unfamiliar to most people outside the world of tech. Even within the world of tech, not many people know its significance. That is because, unlike Google, Microsoft, Apple, and others, ASML flies under the radar.

Yet, ASML is arguably the most important company in the world right now and chances are that you use its technology daily. Actually, you are probably reading this article on a device that exists only because ASML makes what it makes.

Short for Advanced Semiconductor Materials Lithography, ASML is, in a way, behind almost every piece of advanced electronic equipment that you use today. That is because it makes EUV machines, which are needed to create the most advanced silicon chips in the world. These are the chips, such as the A19 inside the latest iPhone, or the Nvidia B200 that powers AI systems like ChatGPT, which make the world run the way it does. ASML is the only company in the world that makes these EUV machines.

It is in this expertise that lies the value of ASML and its partnership with an Indian company. That this is an important agreement can be ascertained from the fact that the signing of the agreement between Tata and ASML was witnessed by Prime Minister Narendra Modi and Prime Minister of the Netherlands Rob Jetten.

What is the agreement?

Before we talk about ASML, let’s take a look at the deal between Tata and the Dutch company. Tata is setting up India’s first commercial semiconductor fab in Dholera, Gujarat. The fab is likely to start producing chips by the end of this year.

Now, when it comes to silicon chip manufacturing, there are two key aspects to note here. One, fab process. And two, the size of the wafer.

The fab process determines the size of transistors on a chip. Smaller is better here. For this technology, Tata is working with Taiwan’s Powerchip Semiconductor Manufacturing Corporation. The fab process with this partnership is likely to be between 110nm to 28nm. Of these, 28nm is particularly advanced. It will still not be enough to create smartphone chips or AI chips, but for a lot of other gadgets and appliances, 28nm should be enough.

For the size of the wafer, which is a round disk made of pure silicon, bigger is better. This is because a bigger wafer means more chips can fit on it, which effectively lowers the cost and helps with commercialisation of chips. Currently, the 300mm wafer is the gold standard, although some work is going on with 450mm as well. But essentially, by partnering with ASML, Tata is going to get the best wafer size technology that is available in the world currently.

Wafer deal may lead to ASML machines

As technology, wafer size is not as strategic or cutting edge as the actual fab process. And when it comes to the actual fab process, ASML is not just a leader at the moment but is the only game in town if you need the best technology.

This best technology is called EUV machines, which can make transistors as small as 2nm. Only ASML makes these machines. A lot of other companies have tried, and are trying, to create and replicate these EUV machines. But they are so complex, and technologically so advanced, that no one else has succeeded in making them so far.

In fact, the EUV machines are such a guarded technology that ASML has been banned by the Netherlands and the US governments from selling them to China. Each of these machines cost somewhere around $400 million (around Rs 3,855 crore) and only four countries — Japan, Taiwan, the US and South Korea — have them.

As part of Tata and ASML partnership, EUV machines are not coming to India. But that is okay. Because the deal brings ASML to India, and that can potentially prove to be a catalyst for India’s ambitious silicon chip manufacturing plans.

Parv Sharma, senior analyst at Counterpoint Research, highlights exactly this aspect of the deal. “This deal will deploy DUV lithography machines rather than bleeding-edge EUV systems,” Parv told India Today Tech. “At full capacity, the 300mm Dholera fab will target 50,000 wafers per month, meaning we will soon see Make in India silicon inside commercial devices.”

The other way in which the deal is significant has to do with the technology transfer it may enable. “This partnership will help Tata Electronics build foundational capabilities — especially in human talent and process discipline — laying the groundwork for a sustainable semiconductor ecosystem in India,” Prabhu Ram, head of Industry Intelligence Group at CMR, told India Today Tech.

Rome wasn’t built in a day. India’s semiconductor industry, too, will not be built in a day, month, or even a year. There is a reason why only a handful of countries in the world have the ability to make their own silicon chips, and more so if we are looking at the cutting edge chips, the kind that go into phones and supercomputers.

Deloitte partner and supply chain leader Easwaran Subramanian says an entire ecosystem is needed. “For India to realise the vision of being a leading global semiconductor hub, the ecosystem needs to be created – beyond fabs, packaging and testing into equipment, materials and chemicals,” he says.

As India embarks on this journey, ASML could be the perfect — and most valuable and powerful — ally. The company can single-handily enable an ecosystem that helps Indian companies make silicon chips. “Combined with the ASML collaboration, Tata Electronics is well-positioned to make India a meaningful player in global semiconductor supply chains,” says Prabhu.

This is what the deal is about. It is a step towards making Tata and other Indian companies major players in a sector dominated by American or Taiwanese companies.

As India continues to work towards building semiconductors, including HCL Group’s India Chip facility in Noida, and indigenous chips like Dhruv64 or Vikram32, this agreement adds to the bigger picture. Parv notes, “This deal solidifies India’s credibility in wafer manufacturing and gives a green signal to the wider global semiconductor ecosystem to invest in the country.”

- Ends