Is India Poised to Emerge as a Semiconductor Giant?

At the time of India's independence in 1947, the nation embarked on a journey to catch up with developed economies in the industrial world. Over the decades, India's semiconductor industry has faced challenges and made significant strides. Today, it stands on the threshold of blossoming into a dominant player in the global semiconductor arena.

India's Early Steps in Semiconductor Technology:

India's venture into the world of semiconductors commenced during the 1960s when a few Indian companies cautiously delved into the production of germanium semiconductors. These pioneering efforts marked India's first foray into semiconductor technology, albeit at a relatively modest scale. During this era, Fairchild Semiconductors, a pioneering name in integrated circuit (IC) technology, explored India as a potential location for its maiden Asian unit. Among the early Indian players, Bharat Electronics Ltd. (BEL), a public sector undertaking (PSU) under the Ministry of Defence (MoD), emerged as a notable contributor. It acquired germanium and silicon technology for manufacturing semiconductor devices. BEL, along with Hindustan Aeronautics Ltd. (HAL), another PSU under the MoD, played vital roles in India's nascent semiconductor landscape. Notably, they primarily catered to the defense sector, laying the initial groundwork for semiconductor production in the country. [1] 

The 1980s: A Turning Point:

The semiconductor industry in India witnessed a significant turning point in the 1980s. This era was characterised by a series of visionary policies under the leadership of Rajiv Gandhi, India's then-Prime Minister. These policies aimed to revitalise and invigorate the electronics industry, creating an ecosystem conducive to semiconductor growth. One of the pivotal milestones during this period was the establishment of Semiconductor Complex Ltd. (SCL) in 1984 as a public sector undertaking. [2] SCL's foundation was made possible through licensing agreements with prominent global semiconductor players such as Hitachi, AMI, and Rockwell. These agreements facilitated the transfer of vital semiconductor knowledge and technology to India. Concurrently, the government invited bids for the establishment of a National Silicon Facility, which garnered substantial interest from global companies, including those from the United States and East Germany. Eventually, the newly-formed Indian company, Metkem Silicon Ltd., with support from BEL, established its polysilicon facilities in Mettur, Tamil Nadu. By the close of the 1980s, India had caught up to the latest semiconductor manufacturing technologies, trailing the global leaders by just two years. [3] 

Semiconductor Dreams Crushed: Fire, Lack of Government Support 

Despite promising advancements, the Indian semiconductor sector faced its share of challenges and setbacks, particularly from the 1990s onwards. In 1989, the SCL complex in Chandigarh confronted a devastating fire, resulting in significant damage. Although efforts were made to revive the complex, it could only produce a limited number of chips, primarily for India's Space Research Organisation (ISRO). [4] The subsequent years brought economic liberalisation policies starting in 1991, which led to an influx of inexpensive semiconductor imports. Furthermore, the semiconductor manufacturing ecosystem in India encountered hurdles stemming from the lack of government subsidies, particularly in the realm of electricity costs. These challenges temporarily disrupted India's progression in semiconductor production.

Current Landscape and Demand:

Fast forward to recent times, and the semiconductor landscape in India has undergone remarkable changes. In 2019, a joint report by Counterpoint Research and the India Electronics & Semiconductor Association (IESA) valued India's semiconductor industry at an impressive US$22.7 billion. [5] The domestic market for semiconductors in 2022 exceeded US$27 billion, with over 90% of the volume being imported from regions like Taiwan, China, South Korea and the United States. [6]

Notably, global economies, including the European Union and the United States, also exhibit high dependency on semiconductor imports, with China and Taiwan being prominent suppliers. According to the report, the Indian semiconductor industry is expected to witness stellar growth in the coming years, likely surpassing a projected valuation of US$64 billion by 2026. It is predicted that the domestic telecom sector and industrial applications will collectively account for a substantial 66% of this total value.

In sync with these projections, India's Prime Minister Narendra Modi inaugurated Semicon India 2023, a national-level conference focusing on the semiconductor industry in Gandhinagar, Gujarat earlier in July. The conference attracted prominent leaders and representatives from various global semiconductor companies and startups. PM Modi expressed his confidence in India's potential to emerge as a reliable chip supplier on the global stage and highlighted India's competitive corporate tax rates and its streamlined taxation process. He further mentioned that the government has offered special incentives to the semiconductor industry, extending a "red-carpet welcome" to stakeholders.

Global Support for India's Semiconductor Dream:

In addition to domestic support, the semiconductor industry in India has garnered significant support from various corners of the globe, underscoring the sector's strategic importance. The United States, in collaboration with the India Semiconductor Mission, has committed substantial investments in semiconductor facilities. For instance, Micron Technology, Inc., has pledged an investment exceeding $800 million towards a new $2.75 billion semiconductor assembly and test facility in India. [7] Applied Materials has announced plans on the development and commercialisation of technologies for semiconductor manufacturing equipment. [8] This initiative further bolsters India's semiconductor supply chain diversification. Additionally, Lam Research, a leading semiconductor equipment supplier, has embarked on an ambitious "Semiverse Solution" to train 60,000 Indian engineers, aiming to accelerate India's semiconductor education and workforce development goals. [9]

Collaborative efforts extend beyond individual companies. The U.S. Semiconductor Industry Association and India Electronics Semiconductor Association have jointly released an interim readiness assessment. This assessment serves to identify near-term industry opportunities while facilitating the long-term strategic development of complementary semiconductor ecosystems. [10]

Japan, a prominent global player in the semiconductor industry, has also extended its hand to India. Japan has become the second Quad partner after the United States to sign an agreement for the joint development of the semiconductor ecosystem. The agreement, signed between Union Minister for Electronics and IT Ashwini Vaishnaw and Japan's Minister of Economy, Trade and Industry Yasutoshi Nishimura, highlights the increasing importance of specialised chips and the need for growing talent and semiconductor fabs (fabrication plants). [11] This collaboration fosters the exchange of technical knowledge, research collaboration, and innovation between the Indian and Japanese semiconductor industries, allowing both to stay at the forefront of semiconductor advancements.

These international strategic partnerships are opening doors to immense potential for India's semiconductor sector. With robust government support, international partnerships, and a growing domestic demand, India's semiconductor industry is poised for remarkable growth and global influence. The nation is well on its way to becoming a pivotal player in the semiconductor world, contributing significantly to the reshaping of global supply chains and the advancement of semiconductor technology.

Ample Solutions to Exhibit at electronica India 2023

Amid this exciting trajectory, one of the key events that highlights India's commitment and growth in the semiconductor industry is electronica India. Held annually and as the country's leading trade show for electronic components, systems, applications, and solutions, electronica India plays a pivotal role in showcasing India's strides in this sector. Ample Solutions is pleased to be one of the exhibitors at electronica India 2023. Meet our dedicated team and learn more about the comprehensive supply chain solutions that Ample Solutions has to offer.

Our Participation

Booth: Hall 5, Booth ED137

Date: 13-15 September 2023

Venue: Bangalore International Exhibition Centre (BIEC)

Click to schedule a meeting: utm.guru/electronicaIndia2023