Deciphering India’s Nascent Plunge into Semiconductor Manufacturing



The Indian semiconductor Industry market size is expected to reach $ 271.9 billion by 2032, with a CAGR of 25.7 percent, according to reports. On the demand side, the growth of the Indian semiconductor industry is expected to be driven by the increasing use of semiconductors in consumer electronics and automotive, including electric cars, and the growing demand for smartphones, as the number of smartphones in India is projected to reach one billion by 2026.

The central and state governments incentivize more than 70 percent of the total cost of setting up a semiconductor manufacturing unit. According to reports, the global semiconductor market size was valued at $ 527.88 billion in 2021 and is projected to soar to $ 1,380.79 billion by 2029. Simultaneously, India's semiconductor market, which was worth $15 billion in 2020, is anticipated to grow exponentially, reaching over $64 billion by 2026. By 2030, India aims to double this figure, achieving a target of $110 billion, along with securing at least a 10 percent share of the global semiconductor market.

India’s Promising Growth Trajectory

In May 2023, the Semiconductor Business Affiliation (SIA) detailed worldwide semiconductor industry deals of $ 40.7 billion, seeing an increment of 1.7 percent from the earlier month. Nonetheless, contrasted with May 2022, deals declined by 21.1 percent, mirroring the instability of the market. Worldwide consumer electronics consumption is closely linked to the semiconductor industry's expansion. The proliferation of AI, IoT, and machine learning technologies has also opened up new opportunities for market growth.

Union Minister Ashwini Vaishnav says, “We are focusing on some specific areas where we can take global leadership. We have emerged as a major segment for telecom and EV (electric vehicle) semiconductors. If we focus on developing and manufacturing chips used in these segments, we can become a global leader in these. Work is being done keeping these emerging areas in mind.”

The government has previously set the cutoff time for business presentation of the first native chipset by 2023-24 under the Computerized India 'Hazard V' program, Shakti (32-bit) and Vega (64-bit) were developed using open-source architecture by the Indian Institute of Technology (IIT)-Madras and Center for Development of Advanced Computing (CDAC) under the Microprocessor Development Program of the Ministry of Electronics and Information Technology. 

“Over the next few months, we should have a lot of success. It will include wafer fabrication, design, and manufacturing in one comprehensive system. The world has increased its confidence in India's potential as a result of the success of Micron's investment in the country. To construct the plant in two phases, Micron will invest up to $825 million, with the remaining investment coming from the federal and state governments,” says Vaishnav.

India's blossoming semiconductor industry additionally holds the possibility to set out various work open doors, monetary development, and draw in unfamiliar ventures. Multinational corporations looking to diversify their supply chains and reduce their reliance on a single region are expected to benefit from India's strategic positioning in this sector as global demand for semiconductors continues to rise. India's commitment to clean energy and sustainability may further increase the semiconductor industry's attractiveness. The focus on solar photovoltaic cells and electric vehicles is in line with the global movement toward environmental consciousness and may pave the way for a semiconductor manufacturing procedure that is both greener and more sustainable.

While Interacting with CEO Insight’s magazine, Deven Pabaru, Chief Business Officer, Stellar Value Chain Solutions, says,” India is a very large country, and we are a very fragmented production and consumption market. This brings in a lot of upfront investment, making it a capital-intensive market. Thus, the government and industry organizations are putting in a lot of effort to make investment in this space easier. Despite being a major challenge, this, according to me, is also a key enabler for the industry to grow and mature further in terms of supply chain efficiency.”

Filling the Skills Gap in the Semiconductor Industry

The chip-production industry is a gigantic, asset-serious one that requires profoundly gifted specialists at each step of the cycle, right from chip plan and assembly to testing and bundling. India has the potential to lead the semiconductor industry by developing a strong talent pool, providing solutions to global supply chain issues, and encouraging academic and startup collaboration to encourage innovation.

"Suraj Rengorajan, CTO, Applied Materials, while speaking at the Bengaluru Tech Summit 2023, says, “India can be an answer for the worldwide lack of semiconductor ability and has the potential to assume a part in the worldwide semiconductor store network methodology. As the business increases, we want to guarantee we have sufficient power and water to make it supportable. India has a chance to create environmentally friendly equipment.”

CEO Insight’s magazine recently interacted with Abhijay Datta, Head ‑ Data Engineering and Analytics Services, Emids, and he says, “Businesses are finding it difficult to navigate this ‘technology bloat’ as I call it. And businesses are nothing but the employees who run them. I feel a leader should have open conversations with employees. They need to start mentoring them on taking personal ownership in upskilling and reskilling. Back in the olden days, employees expected their managers to guide them through their careers. But today, the most impactful thing would be to create a platform for learning and experimenting inside companies.”

Global Implications

India's role in the semiconductor industry has worldwide ramifications. It reduces excessive reliance on a small number of key players and diversifies the supply chain. Global technology resilience is strengthened by this diversification, especially during times of crisis. In addition, India's skilled and cost-effective workforce has the potential to significantly influence the development of cost-effective semiconductor manufacturing and design. This can make cutting-edge innovations more open to developing business sectors, driving advanced incorporation and monetary development around the world.

The government has set a clear timeline for the industrial rollout of the primary indigenous chipsets through 2023-24 as a part of the Digital India RISC-V program. Notably, IIT Madras and the Centre for Development of Advanced Computing (CDAC) have already evolved microprocessors, Shakti (32-bit) and Vega (64-bit), the use of open-supply architecture. These tasks fall below the aegis of the Microprocessor Development Program of the Ministry of Electronics and IT.