India Emerging as Key Player in Global Semiconductor Industry
- Published | 29 June 2023
The government’s efforts to encourage semiconductor manufacturing in the country could help India become a major player in the global semiconductor industry.
Semiconductors are materials that possess electrical conductivity between that of conductors (like copper and aluminum) and insulators (such as rubber and glass). The most commonly used semiconductor material is silicon, due to its abundance and favorable electrical conductivity. Other semiconductor materials include germanium, gallium arsenide, and indium phosphide. In the era of rapid technological advancements, the semiconductor industry stands as a backbone, driving innovations and powering devices that have become an integral part of our daily lives. The semiconductor industry's growth has been nothing short of remarkable. With initiatives to strengthen its presence in this crucial industry, India is poised to play a significant role in shaping the future of semiconductor manufacturing.
Semiconductor – A Key Component in Electronic Devices to Automobiles
Semiconductors are a crucial part in most electronic devices including medical equipment, smart watches, mobile phones, smartphones, computers, laptops, and tablet computers. They enable electronic devices to work faster, become efficient, and cost cheaper.
Global Semiconductor Market - Overview
The global semiconductor market has experienced exponential growth over the past few decades. Semiconductors, the tiny electronic components found in everything from smartphones to self-driving cars, have become increasingly essential. The players in the semiconductor market have a long history of investing heavily during downturns in order to be ready for the inevitable demand comeback. New company investments will contribute to increased domestic semiconductor production and innovations, preventing chip shortages and ensuring the industry meets expanding demand from industries, such as automotive, data storage, and wireless communications. The automobile industry, for instance, is expected to account for 20% of chip demand, while the wireless communication business is expected to account for 25% of growth by 2030. These industries' robust growth will boost demand for the semiconductors business in the next decade.
Role of India in Future Semiconductor Manufacturing
India, known for its prowess in the information technology (IT) sector, is now increasing its focus on developing its semiconductor industry. With a young and tech-savvy population, coupled with a thriving startup ecosystem, the country possesses a solid foundation for semiconductor manufacturing. As a result, many global players have recognized India's potential and are investing in establishing semiconductor fabrication facilities within its borders. India aims to become the world hub for the manufacturing, design, and technology development of semiconductors. In April 2022, inaugurating India's maiden three-day semiconductor conference, SemiconIndia 2022 at Bengaluru, Prime Minister Narendra Modi promised the Indian government’s support to the semiconductor industry. In its vision documents, the government expects India’s consumption of semiconductors for manufacturing electronics goods to cross USD 80 billion by 2026 and to further reach USD 110 billion by the end of 2030.
In the India semiconductor market, there are many fabless semiconductor firms and foundries. The fabless firms significantly focus on the design aspect of semiconductors. The foundries, on the other hand, focus more on semiconductor manufacturing. The automobile industry had to record a significant decline during the COVID-19 pandemic. However, the need for chips for laptops, smartphones, and tablets saw a tremendous rise during the same period. Semiconductor companies faced a significant demand and supply imbalance. Gartner estimated that the global semiconductor industry grew more than 26% in 2021 over 2020, even though the COVID-19 pandemic adversely affected the demand and supply for automobile and chip makers.
According to an industry estimate, the India semiconductor market size value crossed the USD 27-billion mark in 2021 and is projected to expand at a CAGR of about 19%, reaching a value of USD 64 billion by 2026. However, the country does not have its own semiconductor manufacturing capabilities.
Significance of PM Modi’s Visit to the US for Semiconductor Manufacturing in India
On June 21, 2023, Indian Prime Minister Narendra Modi visited the United States, where he met with prominent leaders from the semiconductor industry. The Cabinet authorized a USD 2.7-billion proposal for a semiconductor testing and packaging unit by computer storage chip producer Micron Technology ahead of Prime Minister Modi's official visit to the United States. During his visit, Modi met with Micron CEO Sanjay Mehrotra and invited the business to invest in Indian semiconductor production. Post the meeting, Micron revealed its plans to build a new semiconductor assembly and testing facility in the western state of Gujarat, India. The Indian central & Gujarat state governments will provide financial assistance to the project.
The recent visit to the US paved the way for crucial collaborations and partnerships between India and the global semiconductor giants. "Micron Technology, with support from the Indian National Semiconductor Mission, announced an investment of more than USD 800 million that, together with additional financial support from Indian authorities, could amount to a USD 2.75 billion semiconductor assembly and test facility in India," according to a senior US administration official. Global firms are looking toward India as a feasible investment location for semiconductors, as the Indian government focuses more on making the country a hub for the manufacture of electronics and semiconductors.
India's Initiatives to Boost Local Manufacturing of Semiconductors
As the US and India work together to address semiconductor supply chain difficulties, the US government's pledge to help India build up its semiconductor manufacturing capacity. India has introduced a series of preferential policies to attract chip companies to invest in production in the country. In 2022, the government announced the INR 76,000-crore performance linked incentive (PLI) scheme in the semiconductor sector to boost local manufacturing.
According to a report by the India Electronics & Semiconductor Association (IESA), India's semiconductor component market size could touch USD 300 billion in cumulative revenues by 2026, as 'Make in India' and production-linked incentive (PLI) schemes will boost local sourcing of semi-components in the coming years.
Conclusion
As the global semiconductor industry continues its upward trajectory, India's role in shaping its future becomes increasingly significant. With a growing semiconductor market, strategic government initiatives, and collaborations with global leaders, India is well-positioned to emerge as a key player in semiconductor manufacturing. The combined efforts of industry stakeholders, the government, and skilled Indian professionals will drive this transformation, creating a thriving semiconductor ecosystem within the country's borders. The world watches eagerly as India rises in the global semiconductor industry.
Please Find Below Some Related Reports:
- Semiconductor Market- Global Industry Size, Share, Growth, Opportunity and Forecast, 2018-2028
- India Semiconductor Market- Industry Size, Share, Growth, Opportunity and Forecast, 2018-2028
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