India’s Ascent – Pioneering the Next Semiconductor Hub for the Globe. How Close Is India to Achieving Global Semiconductor Leadership?
Beyond Silicon Valley – India’s Vision to Rewrite the Semiconductor Story
In an era dominated by the digital revolution, semiconductors are the building blocks of our interconnected world. These tiny chips power everything from smartphones to self-driving cars, making them indispensable to modern life. The global semiconductor industry has long been dominated by a few giants, primarily in the United States and East Asia. However, India is now emerging as a formidable contender to become the next semiconductor hub for the globe.
In December 1947, when the United States ushered in the dawn of the semiconductor era, India, a nascent independent nation, was taking its first steps on the world stage. Fast-forward to the present day, where time has ripened but not withered India’s ambitions. Global industry titans are now rallying to bolster India’s pursuit of its semiconductor dream. Yet, it is not a sprint but an enduring marathon that awaits, a journey spanning at least two decades, as affirmed by seasoned experts. Semiconductors, the very basis of our modern technological civilization, reign supreme in nearly every facet of our lives. They breathe life into our smartphones, illuminate our televisions, propel our automobiles, steer our rockets to the stars, and even fortify the might of military arsenals.
Global Supply Chain Disruption: Over the last two years, a global chip drought has gripped the world, an unprecedented scarcity that defies the cyclical patterns of the past. Grimly, this famine is projected to persist until the early embers of 2024. The genesis of this crisis traces back to the onset of the pandemic, a time when automotive manufacturers scaled back their semiconductor orders amid plummeting sales.
Simultaneously, the world underwent a tectonic shift towards remote work, unleashing an insatiable hunger for digital devices. The demand for smartphones surged, and homebound souls sought refuge in electronic sanctuaries like PlayStations. Mark Papermaster, the venerable Chief Technology Officer of Advanced Micro Devices (AMD), attests to the anomaly, stating, “Generally, we don’t witness such acute scarcities as those we grappled with during the pandemic. That was nothing short of extraordinary.”
Chips have now become as strategic as the geopolitical lynchpin that is oil, which has defined the world’s balance of power for decades. In this crucible, companies and the Indian government have forged an alliance, heralding an era of domestic chip manufacturing to secure the vital chip supply. Currently, more than 60 percent of the world’s semiconductors are hewn in the crucible of Taiwan, casting a shadow of vulnerability upon the United States as it stares at the spectre of a potential Chinese incursion.
In this confluence of technological innovation, economic imperatives, and geopolitical realities, India stands at the threshold of a transformative journey. It is a quest not just for technological sovereignty but for a secure and resilient future, where the power of semiconductors transcends the boundaries of nations and shapes the destiny of humanity. As the world embraces India’s ascent in the domain of semiconductors, the echoes of progress reverberate through the annals of history, a testament to human ingenuity and the relentless pursuit of excellence.
The Current Landscape
The semiconductor industry, often considered the brain of modern electronics, is currently dominated by a few key players, primarily located in the United States, East Asia, and Europe. However, recent developments and strategic initiatives have catapulted India into the spotlight. The nation has made significant strides in fostering a conducive environment for semiconductor manufacturing and research and development.
The Indian semiconductor market, with an approximate value of $23.2 billion, is poised for an explosive growth trajectory, projected to soar to $80.3 billion by 2028. This phenomenal ascent, marked by a compelling compound annual growth rate (CAGR) of 17.10% during the forecast period, paints a resounding picture of India’s semiconductor potential.
Rising Demand:
In a world where the demand for semiconductors knows no bounds, India stands as a formidable contender. With a population exceeding 1.4 billion and a robust education system, it has the innate capability to emerge as a global talent powerhouse, offering a vital solution to the acute shortage of skilled professionals in the semiconductor industry.
Adding further momentum to this transformation, the Ministry of Electronics and IT (MeitY) has pledged a monumental $10 billion investment in the India Semiconductor Mission (ISM). This colossal commitment reflects the government’s unwavering determination to establish a strong foothold in the semiconductor market. This investment encompasses capital infusion, enticing incentives for manufacturing, and the pioneering Design Linked Incentive (DLI) scheme. The DLI scheme, tailored to empower Fabless startups, aims to nurture the development of cutting-edge products destined for both domestic and global markets.
While India’s vision of becoming the next semiconductor superpower is undeniably promising, it is not without its share of challenges. Historically, India’s relatively higher costs in terms of land, power, and labour have dissuaded investors. However, the proactive measures taken by the Indian government, including incentives and subsidies, are sculpting an environment that beckons investors, making India an increasingly attractive destination for semiconductor manufacturing. The stage is set for India to seize its place in the global semiconductor spotlight, ushering in a new era of technological prowess.
Strategic Government Initiatives to Catalyze India’s Semiconductor Manufacturing Renaissance:
Within the corridors of power, India recognizes the seismic importance of the semiconductor industry. In a calculated move that reverberates with strategic foresight, the Indian government has unveiled a constellation of measures and policies designed to propel India into the vanguard of global semiconductor manufacturing.
At the heart of this endeavour lies the resolute “Make in India” initiative, unfurled in 2014 with the audacious aim of not just nurturing manufacturing within India’s borders but also unfurling the nation’s flag on the global stage as an unrivalled manufacturing powerhouse. As part of this crusade, several transformative initiatives have been unveiled to galvanize semiconductor production, chief among them being the paradigm-shifting Production Linked Incentive (PLI) scheme for the electronics sector.
Under its aegis, a staggering $1.7 billion incentive package beckons companies to establish semiconductor manufacturing empires on Indian soil, creating a veritable crucible of innovation. In doing so, this groundbreaking policy extends its benevolent hand not only to semiconductor giants but also bequeaths a cascade of indirect and specialized job opportunities.
In addition to PLI, a symphony of supporting policies and incentives has been orchestrated. The Design Linked Incentive (DLI) harmonizes with other visionary initiatives such as “Chips to Startup” (C2S) and the “Scheme for Promotion of Electronic Components and Semiconductors” (SPECS), reinforcing India’s commitment to catalyze semiconductor sector growth.
But the government’s ambitions transcend the national sphere, resonating with global implications. Witness the “Semicon India program,” meticulously devised to combat the acute global chip shortage by beckoning manufacturers to erect their semiconductor fortresses on Indian terrain.
India’s most valuable asset is its extensive pool of exceptionally skilled and expert workforce.
India’s crown jewel in this epic quest is its unparalleled treasure trove of highly skilled and ingenious minds. Recent years have witnessed India’s ascent in the semiconductor hierarchy, birthing a corps of world-class semiconductor design engineers.
A formidable 20% of the global semiconductor design workforce comprises Indian engineers, with over one lakh VLSI Design Engineers plying their craft in global semiconductor behemoths and indigenous design service empires. They form the bedrock of cutting-edge chip development, participating in every stage of the design process, from conceptualization and architecture to physical realization, verification, manufacturing support, and post-Si testing and qualification.
To fortify this resource for the future, the government has unfurled programs that incubate and nourish talent in the semiconductor sphere. The All India Council for Technical Education (AICTE) has undertaken curriculum metamorphoses, but industry participation remains the linchpin for the augmentation and sustenance of this talent pool.
Beyond borders, foreign behemoths in the Semiconductor arena have sensed India’s inexorable Rise:
Leading American semiconductor titans have pledged substantial investments, igniting a new era of collaborative innovation. The partnership between India and the United States envisions fortifying semiconductor supply chains and establishing a collaborative edifice to bolster the resilience and diversification of semiconductor supply networks.
Micron Technology, one of the world’s preeminent chip manufacturers, has signified India’s pivotal role by unveiling an unprecedented investment plan exceeding $800 million. Gujarat, India, shall witness the construction of a monumental semiconductor assembly and test facility, heralding a renaissance in India’s semiconductor landscape while sowing the seeds for a multitude of high-tech and construction vocations.
Applied Materials, domiciled in California’s Silicon Valley and a vanguard in materials engineering solutions for chip and display production, has charted its trajectory toward India. The establishment of a collaborative engineering center in Bengaluru heralds a nexus of applied engineers, global and domestic suppliers, research institutions, and academia, poised to accelerate the development of semiconductor equipment sub-systems and components. Simultaneously, it shall serve as an academy, nurturing the future torchbearers of India’s burgeoning semiconductor industry.
Lam Research Corporation, headquartered in Fremont, has undertaken a sacred commitment: to train the next generation of semiconductor engineers in India. This initiative aims to educate and equip up to 60,000 Indian engineers with the alchemy of nanotechnologies over a 10-year odyssey, underpinning India’s vision for semiconductor education and workforce evolution.
In concert with these remarkable developments, the US Semiconductor Industry Association and the India Electronics Semiconductor Association (IESA) have unveiled an interim readiness assessment, a blueprint to discern immediate industry prospects and orchestrate long-term strategic evolution within complementary semiconductor ecosystems.
Sustaining the Pace and Charting a Path:
In order to fully unlock its potential for growth, the global semiconductor industry requires a network of diverse manufacturing hubs and a robust, diversified supply chain. With expectations of nearly doubling its revenue by the end of this decade, driven by the demand for advanced applications such as autonomous machines, smart medical devices, 6G communications, and AI integration across various electronics sectors, India is strategically positioned to secure a substantial share of this thriving market.
However, the industry is grappling with a critical talent deficit as it seeks to expand its manufacturing capacities to meet this impending growth. The paramount importance of workforce development programs and skill enhancement initiatives cannot be overstated in charting the industry’s path forward.
Professor Rao Tummala, a distinguished member of the advisory committee of the India Semiconductor Mission and affiliated with Georgia Tech University, underscores a pressing issue: the lack of cutting-edge infrastructure labs within Indian universities, which currently acts as a barrier to many aspiring students considering careers in this sector. He acknowledges the government’s earnest efforts in addressing this challenge but underscores the indispensable need for substantial investments in infrastructure, expertise, and resources to ensure the program’s success.
Fabs, semiconductor fabrication units, have been transformative forces for economies fortunate enough to host them, generating substantial employment opportunities and contributing significantly to national revenues. This resonates that the recent substantial subsidy and incentive programs worldwide reflect policymakers’ growing recognition of the immense investments required to secure a foothold in semiconductor manufacturing. India’s journey, therefore, hinges on its unwavering commitment to continued investment in this dynamic industry to ultimately reap its manifold benefits.
Investments Announced in 2023:
- Micron Technology – To build a new assembly and test facility in Gujarat, the company has invested $825 MN over the two phases of the project
- Applied Materials – The company intends to make a grass investment of $400 MN over the next four years to establish a new collaborative engineering centre in India
- Advanced Micro Devices – AMD announced a $400 MN investment over the next five years to expand its R&D and operations in India
- Foxconn – The iPhone manufacturer will invest more than $600 MN in India as part of a phone manufacturing project and separately, a semiconductor equipment facility.
To summarize, India’s aspirations to become the next global semiconductor hub are bold and ambitious. With a growing domestic market, government support, and a burgeoning ecosystem, India is well-positioned to make its mark in the semiconductor industry. However, overcoming technological challenges, building a skilled workforce, and ensuring a resilient supply chain are critical for realizing this vision. As the world looks towards India as a potential semiconductor powerhouse, the nation’s commitment to innovation and self-reliance will shape the future of this vital industry.
#SemiconductorHub, #IndiaTech,#SemiconductorIndustry #MakeInIndia, #TechInnovation, #SemiconductorManufacturing, #GlobalTech, #ElectronicsManufacturing, #SemiconductorRevolution, #futuretechnology #TechutzpahConsulting #Thinkers360
