India's Semiconductor Industry: Growth and Challenges

India is an integral part of the Semiconductor industry. Back in December 2021, the Indian Government announced the 76000 crore incentive scheme, which helped and boosted the semiconductor industry in India. Furthermore, when we talk about the growth, the government and the industry are looking for $55 billion by the end of 2026 and $110 billion by 2030. Yet there are certain challenges that are prevalent in the industry. From Laptops to smartphones to machinery to new age electric vehicles, all these industries are powered by semiconductor plants.

In 2023, the Indian semiconductor market is valued at approximately $34.3 billion, with projections estimating it will reach $100.2 billion by 2032, according to expert analysis. This growth represents a compound annual growth rate (CAGR) of about 20.1%. The expansion highlights the increasing demand for semiconductors across various sectors, especially with the rise of electric vehicles, IoT devices, and advanced communication technologies.

India is also forming partnerships with several countries to enhance its semiconductor manufacturing capabilities. Collaborating with nations like Taiwan and the U.S. is crucial for developing advanced semiconductor facilities and acquiring new technologies.

The government’s “Make in India” and “Atmanirbhar Bharat” initiatives focus on reducing import dependence and promoting domestic manufacturing, including in the semiconductor sector.

Key Challenges in India’s Semiconductor Sector

However, the industry faces challenges such as high setup costs, competition with global leaders, and the need for a strong supply chain. Collaboration with global semiconductor leaders, investments, and knowledge-sharing are essential for India’s progress in this sector.

With growing demand for semiconductor chips driven by technologies like 5G, IoT, and Artificial Intelligence, India’s semiconductor manufacturing industry shows promise. It aims to become a key player in the global supply chain, offering opportunities for economic growth and technological advancement in the country.

According to a joint report by the India Electronics and Semiconductor Association, the country’s semiconductor consumption is set to increase from $22 billion in 2019 to $64 billion by 2026 - a 16% CAGR. By 2030, semiconductor consumption is projected to nearly double again to $110 billion, positioning India to account for approximately 10% of global semiconductor demand. Official statistics show that only around 4 per cent of global semiconductor sales occurred in India in 2022.

However, the country accounts for about 10 per cent of real global consumption. This discrepancy arises because many semiconductors sold in regions like Hong Kong or Singapore are ultimately integrated into products manufactured in India. Although these products may be exported, the initial semiconductor transformation or installation happens domestically, highlighting India's significant role in the global supply chain. By 2030, the largest segments of India's semiconductor market are expected to be.

Future Outlook: Industry Insights on India as a Global Semiconductor Hub

Julian John, CEO, of Zion Technologies shared insights - "In recent years, the Government of India has launched the India Semiconductor Mission (ISM), committing approximately USD 10 billion to boost domestic semiconductor manufacturing. The incentives under this program include a 50% subsidy on semiconductor projects such as foundries, ATMP (Assembly, Testing, Marking, and Packaging) units, and display fabs, with additional state-level incentives contributing another 20-25%. So far, India has attracted INR 1.5 trillion in semiconductor investments from major companies such as Micron, Tata Electronics, CG Power, and Kaynes Technology. The Indian government’s “Chips to Startup” (C2S) program, in collaboration with companies like Synopsys, aims to create a skilled workforce by partnering with over 400 universities.

India depends on imports to fulfil its need for semiconductor devices. The major reason behind this highly dependent behaviour is the absence of a semiconductor fabrication facility in India. Today, India has started its revolution in the international semiconductor market by establishing its existence and might be a valuable hub for semiconductor manufacturing in the years to come
India Semiconductor Mission (ISM) is a specialized and independent Business Division within the Digital India Corporation that aims to build a vibrant semiconductor and display ecosystem to enable India’s emergence as a global hub for electronics manufacturing and design.

The consumption has increased because of the rising domestic demand of Indian customers. The consumption of mobile devices and computers has sharply increased in India. Also, the Indian government is now concentrating on going digital and making rural India adopt digital methods of education and transactions. Also, Indian start-ups have shot up in numbers and for all the innovative ideas to come to reality, more and more electronic gadgets are being used.

While multinational corporations dominate India’s semiconductor design landscape, the domestic ecosystem is slowly maturing. As of early 2023, India had about 21 start-ups in semiconductor design and manufacturing, with projections to reach 50 by year-end. Mindgrove Technologies, a Chennai-based start-up, is noteworthy for developing systems-on-a-chip (SoC) for connected devices. It aims to fill a market gap by offering chips that balance cost, power optimization, and performance—targeting applications such as smart meters and automotive devices. Zion Technologies has stepped in as a consultant filling in the gap for providing support to spread awareness for setting up the semiconductor facilities. We are also working on a new technology alongside our Taiwanese counterparts to introduce a new way of processing semiconductors. All the processes like wafer preparation, photolithography, etching, doping, metallization and Assembly and packaging will be done in a new way at a reduced cost."

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