Semiconductors are the base for everything in today’s digital world, from transportation to quantum computing. They are complex products to design and manufacture, and rely on an intricate global supply chain for raw materials, equipment, research and development, technology, human talent, testing and distribution. Over the last two decades, the world’s economy has become farther dispersed yet more interconnected with regard to production and trade. The semiconductor industry today exemplifies a truly global supply chain from its operations and players at different stages to the end customers.
The success of the semiconductor industry has depended on its ability to innovate, protect intellectual property and operate globally through efficient and cost-effective supply chains. Specifically, for this industry, all phases of the value chain—research, design, manufacturing, assembly and packaging—occur in a globally integrated network. Each segment of the semiconductor value chain has, on average, 25 countries involved in the direct supply chain and 23 countries involved in supporting market functions. Each region performs different roles according to its comparative advantages making room for the continuous pursuit of innovation to further hone and evolve and meet the changing requirements.
As per the World Semiconductor Trade Statistics organization, India accounts for 1% of global trade in semiconductors and 0.5% of global semiconductor sales. Despite being small, India’s role in the trade and sale of semiconductors has grown significantly. This is coupled with India’s growing ICT spending forecasted to grow by over 10% to reach $91 billion in 2021 and is expected to reach $111 billion by 2024. The COVID—19 pandemic, global chip shortages and global conflicts have brought to the forefront the poignance and urgent need to diversify and build self-capacity in high technology domains. The EU, United States, China and Japan all have announced measures to strengthen their respective domestic semiconductor industries.
The Government of India has been cognizant of the potential and strategic significance of the sector. In December 2021, the Union Ministry for Electronics and IT approved a $10 billion package to incentivize the manufacturing of semiconductors in the country with the announcement of an India Semiconductor Mission. Anyone setting up a semiconductor fab unit will get capital investment support, complete support for infrastructure, development of the supply chain and many other resources required to create an ecosystem.
With the foundation of digital infrastructure to connect over 1.4 billion Indians, India is paving the way towards the next technology revolution to unleash the next wave of innovation in data, AI and other technologies. Prime Minister Modi stated that India’s consumption of semiconductors is expected to cross $80 billion by 2026 and $110 billion by 2030. India has a large semiconductor design talent pool with nearly 20% of the world’s semiconductor design engineers and also the R&D or design centers of several semiconductor design companies. With such strong expertise of semiconductor design professionals in electronic design automation tools, India is now looking at manufacturing.
Semiconductor innovation is an important harbinger of broader technological innovation. Cutting-edge semiconductors will be the bedrock for each innovative technology of the future, from AI to virtual reality and electric cars. To ensure the development and progress of the industry to meet the requirements at large, chipmakers are gradually starting to increase spending on research and development. Given the size of the economy, focus on technology
and skilled engineers, India stands to greatly benefit by being open to innovation and experimentation.
Since new-age technologies require innovation at the design, material and process levels, the semiconductor industry has been changing fast to meet the evolving desideratum. True to Moore’s Law, the rapid evolution and growth from the older 28 – 65 nm node processes to the more advanced 7nm nodes today highlights the potential of semiconductors. Apart from incentivizing more foreign direct investments in electronics to deepen supply chains through incentive schemes, focusing on encouraging Indian manufacturers and start-ups to enter and master complex research and development and manufacturing verticals can ensure continued innovation. India is investing capital and encouraging entrepreneurship and startups in the design and innovation ecosystem.
Skilling and innovation are the yardsticks to be kept in mind for India to be able to create a sustainable ecosystem that will serve India as well as the world’s needs in the coming years. The semiconductor ecosystem in the country should develop so as to strategically contribute and benefit from the global supply chain. A global, efficient, competitive, profitable and resilient semiconductor industry can usher continual technological innovations benefitting people, businesses and nations.