The pandemic has highlighted the importance of autonomy, prompting countries to reconsider their semiconductor strategies.
The chip shortage is the result of growing demand, driven by the virtual shift caused by COVID-19, affecting consumer desires for electronics and remote work.
Acknowledging the necessity of its dependence on imported semiconductors, MeitY revealed a $10 billion commitment to the India Semiconductor Project (ISM).
The semiconductor landscape is undergoing a profound transformation, with countries such as Taiwan (TSMC), South Korea (Samsung), and the United States (Intel, AMD) dominating the industry.
However, the COVID-19 pandemic has highlighted the vulnerabilities of this global supply chain. Shutdowns and disruptions have reverberated across industries, making it clear that it is imperative to diversify resources from critical components.
The pandemic has highlighted the importance of autonomy, prompting countries to reconsider their semiconductor strategies.
India has noticed a notable increase in the consumption of electronics in recent years. The Indian semiconductor industry is expected to reach a market value of $55 billion by 2026, driven basically by the demand for semiconductors for smartphones and wearables, auto parts, as well as computers and data storage, which together make up more than 60%. of the market.
However, India’s reliance on imports for those critical parts has exposed its vulnerability to global chain disruptions, as evidenced by the COVID-19 pandemic.
India’s heavy reliance on semiconductor imports, which account for 95% of its sources from countries such as China, Taiwan, South Korea, and Singapore, has highlighted its vulnerabilities to shocks such as the pandemic.
The microchip shortage is the result of growing demand, driven by the virtual shift brought on by COVID-19, affecting consumer electronics and remote painting requirements. At the same time, disruptions in production in primary production countries due to lockdowns and hard work. Shortages in Taiwan, a primary manufacturer responsible for more than 60% of smelters’ global revenues, have severely affected the availability of semiconductors.
Moreover, while other microchip-dependent industries have slowed production due to the pandemic, this has exacerbated the gap between source and demand. The imbalance has led to a scramble between semiconductor manufacturers and suppliers, triggering hoarding and ultimately worsening the supply crisis. affecting the production of electronics in India.
The effect of the semiconductor shortage was highlighted in 2022, with a loss of around 170,000 pieces of equipment across Maruti Suzuki India. This crisis has highlighted the pressing need for India to develop domestic semiconductor production capacity.
Recognising the need to rely on imported semiconductors, the Ministry of Electronics and Information Technology (MeitY) has revealed a $10 billion commitment to the Indian Semiconductor Mission (ISM).
The move underscores the government’s ambition to identify a presence in the semiconductor sector. The investment includes funding, production incentives, and the Design Linked Incentive (DLI) program, designed for Fabless startups to create products for domestic and foreign markets.
For example, Micron Technology has revealed plans to invest more than $800 million in the creation of a new semiconductor meeting and testing facility in Gujarat, India. This move is poised to bring about a truly extensive transformation in the Indian semiconductor sector, which will lead to the creation of many job opportunities in the high-tech and structural sectors.
Setting up a semiconductor production plant is a daunting task, basically due to its capital-intensive nature, as the prices in question are significant, which can deter potential investors. However, it is imperative to recognize that these investments are not just for the present; They serve as seeds of a high-tech future.
The significant budget invested today in these plants will ultimately allow the production of state-of-the-art generation and will contribute to the emergence of a technologically empowered country in the years to come.
In addition, semiconductor production plants require critical resources such as blank water, an uninterrupted power supply, and human expertise.
These prerequisites are not mere immediate requirements, but rather the building blocks of a technologically complex future. Today’s infrastructure investments will continue in India’s semiconductor industry for an extended period, ensuring its expansion and sustainability.
However, India faces a tough festival from well-established global players in East Asia, who have decades of experience and physically powerful supply chains. Competing with those industry giants requires a long-term commitment and not a short-term challenge.
To thrive in this competitive landscape, India wants to strategically invest in R&D
India has taken significant steps for its semiconductor industry by entering into memorandums of understanding (MoUs) with foreign consortia such as IGSS Ventures, ISMC, and Vedanta Foxconn.
These agreements mark a step towards the status quo of semiconductor production facilities (factories) in the country. To further inspire and facilitate this effort, the Government of India has committed to providing very comprehensive fiscal support, which will cover up to 50% of the allocation costs. for those plants.
This strategic partnership with foreign consortia underscores India’s commitment to building a robust semiconductor production ecosystem. The government’s commitment to providing money demonstrates its popularity for the capital-intensive nature of semiconductor production plants and its commitment to creating an interesting investment landscape for this high-tech industry. technology sector.
These advancements are set to play a pivotal role in India’s adventure towards self-sufficiency and competitiveness in the semiconductor industry, marking a milestone in the country’s technological advancement.
Several strategic locations have been set aside for the status quo of chip production sets in India, with a particular focus on states such as Karnataka, Tamil Nadu, Telangana, and Gujarat. These states were chosen for their advantageous attributes, which make them very suitable. for semiconductor production.
These locations were selected because of their existing infrastructure, which can speed up the installation of a semiconductor production plant and reduce start-up costs. They also foster thriving semiconductor ecosystems, fostering collaboration and innovation.
This ecosystem includes think tanks, educational centers, and specialized companies, which play a role in the long-term expansion of semiconductor manufacturing.
In addition, those regions offer a wealth of professional talent, adding engineers and scholars, which is to the good fortune of the Fabs. These sites are not reserved for existing factories, but are considered seedlings for long-term tech ecosystems, which are expected. to attract more investment, talent and research initiatives.
India’s foray into semiconductor production holds great promise for the automotive, telecommunications and medical device sectors. While the initial goal is to meet existing demands, the broader goal is to prepare for the future.
This ambitious vision aims not only to bring the production and employment of electronics to life, but also to protect India from shocks from global sources, marking a step towards technological self-sufficiency.
This transformation initiative is being led by a coalition of key players, the Ministry of Electronics and Informatics, India Semiconductor Mission, ISA, IGSS Ventures and Vedanta-Foxconn JV. The fruitful collaboration between these entities will play a decisive role in the implementation of India’s semiconductor projects.
In addition, skills progression is a critical area of concentration, and the government plans to bring 85,000 engineers and professional staff into the semiconductor ecosystem. Programs such as ‘Chips to Startup’ facilitate technical education, emphasizing that this investment in human capital is not just for the supply but also lays the foundation for India’s technological future.
At the same time, India fosters innovation projects and studies such as the Semiconductor Laboratory (SCL), the Institute of Semiconductor Technology (IST), and the Centers of Excellence.
These efforts are only aimed at getting quick results; Sow the seeds of long-term progress. In addition, strengthening the source chain by local production of semiconductor materials such as silicon wafers, gases, and chemicals generates self-sufficiency and secures the source chain for India’s technological long-term.
This comprehensive technique aligns with the broader vision of India (Make in India and Atmanirbhar Bharat), which has the potential to attract significant investments and drive economic growth.
In addition, geopolitical tensions and China’s dominant position in the global electronics origin chain have boosted India’s strategic efforts to reduce its dependence on imports. The status quo of semiconductor factories in the country not only strengthens India’s influence and bargaining power in the origin chain, but also strengthens national security by granting it over critical technologies.
The push towards self-sufficiency in semiconductor production aligns with India’s broader economic and geopolitical goals. India is proactive in partnering with like-minded countries through projects such as the Supply Chain Resilience Initiative (SCRI) and joining the Indo-Pacific Economic Framework (IPEF). underlines its commitment to diversifying source chains outside China.
By making “chip manufacturing” a national priority and engaging with global players, India aims to position itself as a reliable and self-sufficient destination in semiconductor manufacturing, thereby contributing to economic expansion and strategic autonomy.
Investing in semiconductor production projects in India is not just a monetary transaction. This is a challenge for India’s technological future. It’s a bet on a country that has decided to become a semiconductor superpower.
As India tackles demanding situations and invests in the ecosystem, it is laying the groundwork for a long-term in which it will not only be a generation customer but also an author and innovator.
The adventure ahead is marked by challenges, but also by immense opportunities. India’s adventure towards semiconductor self-sufficiency is a testament to its unwavering commitment to technological empowerment, economic growth, and environmental sustainability.
Unlock this story and all the benefits reserved for Inc42 Plus members.
Unlock this story and all the benefits reserved for Inc42 Plus members.
Unlock this story and all the benefits reserved for Inc42 Plus members.
Unlock this story and all the benefits reserved for Inc42 Plus members.