Introduction
The global semiconductor industry is the backbone of modern technology, powering everything from smartphones to autonomous vehicles. As the world becomes increasingly digitized, the demand for semiconductors continues to surge. In this landscape, India is emerging as a significant player, aiming to establish itself as a global hub for semiconductor design, manufacturing, and innovation.
Current State of India’s Semiconductor Industry
India’s semiconductor industry is on a trajectory of rapid growth. The country’s semiconductor consumption is projected to increase from $22 billion in 2019 to $64 billion by 2026, representing a compound annual growth rate (CAGR) of 16%. By 2030, this figure is expected to nearly double again, reaching $110 billion and accounting for approximately 10% of global semiconductor demand.
Several key players are shaping the Indian semiconductor landscape. Tata Electronics, in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC), is at the forefront with plans for multiple fabrication plants. Other significant contributors include Vedanta & Foxconn’s joint venture, Micron Technology, and established IT giants like Tata Consultancy Services (TCS) and Wipro.
The Indian government has launched several initiatives to support the industry’s growth. The India Semiconductor Mission (ISM), with a budget of $10 billion, aims to develop a comprehensive ecosystem for semiconductor and display manufacturing. Additionally, the Production Linked Incentive (PLI) scheme and the Design Linked Incentive (DLI) scheme provide financial incentives to boost domestic manufacturing and design capabilities.
Major Developments and Investments
One of the most significant developments in India’s semiconductor industry is Tata Electronics’ plan to establish multiple fabrication plants in Dholera, Gujarat. The first fab, currently under construction, is expected to begin production in 2026 with a capacity of up to 50,000 wafers per month. This facility will manufacture chips for various sectors, including automotive, artificial intelligence, and wireless communication.
Micron Technology, a global leader in memory and storage solutions, is investing $2.75 billion to set up India’s first semiconductor assembly and testing facility. This project is expected to create up to 5,000 direct jobs and 15,000 indirect jobs in the coming years.
Other notable developments include Samsung Semiconductor India Research (SSIR) inaugurating a new R&D facility in Bengaluru, and the approval of two Karnataka-based semiconductor firms, Saankhya Labs and Sensesemi Technologies, under the Design-Linked Incentive (DLI) Scheme.
Key Drivers of Growth
Several factors are driving the growth of India’s semiconductor industry:
- 5G and telecommunications: The rollout of 5G networks is creating a surge in demand for high-performance semiconductors.
- Automotive and electric vehicle industry: The growing automotive sector, particularly the shift towards electric vehicles, is increasing the need for specialized semiconductors.
- Internet of Things (IoT) applications: The proliferation of IoT devices across various sectors is fueling demand for sensors and other semiconductor components.
- Artificial Intelligence and Machine Learning: The rise of AI and ML applications is driving the need for advanced processing capabilities, boosting demand for high-performance chips.
Government Support and Policies
The Indian government has implemented several policies to support the semiconductor industry:
India Semiconductor Mission (ISM): This initiative aims to establish India as a global hub for semiconductor design, manufacturing, and research.
Production Linked Incentive (PLI) Scheme: This program offers financial incentives to companies investing in domestic manufacturing of semiconductors and other electronic components.
Design Linked Incentive (DLI) Scheme: This scheme provides support for semiconductor design companies, encouraging innovation and intellectual property development within India.
These policies demonstrate the government’s commitment to fostering a robust semiconductor ecosystem in the country.
Challenges Facing the Industry
Despite the promising outlook, India’s semiconductor industry faces several challenges:
- High capital requirements: Setting up a state-of-the-art semiconductor fab can cost between $5 billion and $20 billion, requiring significant investment and financial support.
- Resource management: Semiconductor manufacturing is resource-intensive, particularly in terms of water and energy usage. This presents challenges in regions where these resources may be scarce.
- Skilled workforce shortage: While India has a large pool of engineering talent, there is still a shortage of specialized skills in semiconductor manufacturing and advanced chip design.
- Supply chain and customs bottlenecks: India’s import/export operations can face delays, particularly in customs processes, which can disrupt the supply chain for critical components and materials.
Opportunities for India
Despite these challenges, India’s semiconductor industry presents numerous opportunities:
- Becoming a global semiconductor hub: With the right investments and policies, India has the potential to become a major player in the global semiconductor industry.
- Reducing import dependency: By developing domestic manufacturing capabilities, India can reduce its reliance on semiconductor imports, improving its trade balance and technological self-reliance.
- Job creation and economic growth: The semiconductor industry has the potential to create millions of high-skilled jobs and contribute significantly to India’s economic growth.
- Strengthening technological sovereignty: A robust domestic semiconductor industry will enhance India’s technological capabilities and reduce vulnerability to global supply chain disruptions.
India’s Role in the Global Semiconductor Supply Chain
The semiconductor value chain is complex and involves several key stages:
- Design: This includes chip architecture and layout design.
- Fabrication: The process of manufacturing the actual semiconductor chips.
- Assembly, Testing, Marking, and Packaging (ATMP): These are the stages before the chips are ready for use.
- Distribution: Getting the finished products to end-users.
India currently excels in the design stage and is making strides in ATMP operations. The country aims to move up the value chain by establishing fabrication facilities and enhancing its capabilities in advanced chip design.
India is well-positioned to play a significant role in the global semiconductor supply chain. The country already contributes 20% of the global semiconductor design talent, with over 35,000 engineers engaged in chip design. India’s strengths in software development and electronics manufacturing provide a solid foundation for expanding its presence in the semiconductor value chain.
Currently, India excels in Assembly, Testing, Marking, and Packaging (ATMP) operations. The country aims to move up the value chain by establishing fabrication facilities and enhancing its capabilities in advanced chip design. Collaborations with international partners, such as the partnership between Tata Electronics and PSMC, are crucial for technology transfer and capacity building.
Most In-Demand Job Functions
As the semiconductor industry in India grows, several job functions are becoming increasingly in demand:
- Semiconductor Process Engineers: Responsible for developing and optimizing manufacturing processes.
- Device Development Engineers: Focus on designing and developing semiconductor devices.
- Semiconductor Test Engineers: Ensure the quality and reliability of semiconductor devices.
- Semiconductor Packaging Engineers: Design and develop packaging solutions for semiconductor devices.
- AI Chip Specialists: With the rise of AI, specialists in AI chip design and manufacturing are highly sought after.
- Quantum Computing Engineers: As quantum technology advances, engineers with expertise in quantum semiconductors are becoming increasingly important.
- Supply Chain Analysts: Efficient management of complex supply chains is crucial in the semiconductor industry.
Trends for the Future Related to Job Demands
Several trends are shaping the future of job demands in the semiconductor industry:
Skill Gap Closure: There’s a growing focus on closing the talent gap in the semiconductor industry. Companies and governments are investing in training and education programs to develop the necessary skills.
Sustainability Focus: Companies are increasingly prioritizing candidates who can contribute to sustainability initiatives and reduce carbon footprints.
Remote and Flexible Work: Many semiconductor companies have implemented flexible work policies, attracting a broader and highly qualified talent pool.
AI and Automation Integration: The integration of AI and automation in semiconductor manufacturing is creating demand for professionals skilled in these areas.
Rapid Job Creation: The semiconductor sector is poised to create 1 million jobs in India by 2026. This includes roles in chip fabrication, ATMP, chip design, software development, and manufacturing supply chain management.
Upskilling and Reskilling: To meet the target of having 1 million skilled employees by 2026, India will need to upskill 500,000 talents every year.
Increased Investment in Skill Development: In the next 2-3 years, investment in skilling and re-skilling in the semiconductor industry is expected to increase by 25%
Future Outlook
The future of India’s semiconductor industry looks promising. By 2030, India is projected to account for approximately 10% of the global semiconductor market, with a market value of $110 billion. The country is expected to see growth across various segments, including wireless communications ($26.5 billion), consumer goods ($26 billion), and automotive ($22 billion).
Emerging trends and technologies, such as artificial intelligence, 5G, and the Internet of Things, will continue to drive demand for semiconductors. India’s focus on developing capabilities in these areas positions it well to capitalize on these trends.
The long-term vision for India’s semiconductor industry involves not only meeting domestic demand but also becoming a major exporter of semiconductor products and services. This aligns with the government’s broader goals of making India a global manufacturing hub and achieving technological self-reliance.
Conclusion
India’s semiconductor industry stands at a critical juncture, poised for significant growth and transformation. The country’s large and growing market, coupled with government support and international collaborations, provides a strong foundation for the industry’s development. While challenges such as high capital requirements and skill shortages exist, the opportunities for growth and innovation are substantial.
To fully realize its potential, India must continue to invest in infrastructure, education, and research and development. Stakeholders across government, industry, and academia must work together to create a thriving ecosystem that can compete on the global stage. As the world becomes increasingly dependent on semiconductor technology, India has the opportunity to play a pivotal role in shaping the future of this critical industry.
The rise of India’s semiconductor industry is not just about economic growth; it’s about technological sovereignty, innovation, and India’s position in the global technology landscape. By addressing the challenges and capitalizing on its strengths, India can emerge as a semiconductor powerhouse, driving innovation and economic growth for decades to come.
