Can India Catapult To Become the New Semiconductor Hub?

The Indian semiconductor market stood at $15 billion in 2020 and is estimated to reach $63 billion by 2026

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With the world moving towards digitization, the need for semiconductors is rising as well. Semiconductors are essential for almost all sectors, but the ongoing Russia-Ukraine war made them scarce. Amid the chip shortage, India is looking ahead to collaborate with global companies.

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Recently, Piyush Goyal, India's commerce and industry minister, held a meeting with Tim Archer, CEO of Lam Research. "Building on our pool of young and skilled workforce, discussed how India in collaboration with Lam research, can provide a leading edge in semiconductor innovation," the minister mentioned in a tweet, adding that he deliberated on how one of the world's largest semiconductor companies can further strengthen India's semiconductor, display and solar manufacturing ecosystems.

Emphasizing the importance of having a semiconductor plant in India, Gautam Adani, chairman Adani Group said, "The paradox of capitalism is that India continues to be the best global pool for millions of engineers – especially for US companies – but the primary value addition to the businesses happens outside India. India cannot remain dependent on global supply chains that are based on semiconductor nationalism and will need US support with technology transfer." Adani was speaking at the India Ideas Summit organized by USIBC in New Delhi recently.

Semiconductors are the building blocks of electronic devices ranging from smartphones and Cloud servers to modern cars, industrial automation, critical infrastructure and defense systems. The Indian semiconductor market stood at $15 billion in 2020 and is estimated to reach $63 billion by 2026, noted a statement by the ministry of electronics and information technology.

"Whether it's the need for storage or data, the need for Cloud or the need for data centers, these are going to be four times more just based on the data prediction. Semiconductor is going to be a very important building block for anything that we do digitally," said Nivruti Rai, country head Intel India while speaking at the India Ideas Summit.

Data storing and semiconductors share a synergistic relationship. "Today, data is considered as the new oil. Semiconductors play an integral role in storing and processing humongous data," said Virat Bhatia, managing director, Apple, at the Summit.

The Indian semiconductor industry is steadily moving towards greater global collaborations. Israeli firm ISMC Analog Fab Pvt. Ltd has signed a MoU with the government of Karnataka for establishing a semiconductor plant in Mysuru. Recently, Vedanta chairman Anil Agarwal a few days back mentioned that the company, in partnership with electronics manufacturing giant Foxconn, will set up a semiconductor manufacturing plant in the next two years in India.

However, globally the semiconductor industry is plagued by challenges and the current shortages can set alarming trends. "Semiconductor companies are grappling with increased design complexity, a talent shortage and pandemic-related issues that are disrupting the complex, global supply chain that links players in different markets. The shortage is now so concerning that it is prompting more large technology companies and major automotive OEMs to move chip design in-house—a trend that could have major implications for the market," quoted a report by McKinsey in April 2022.