India's semiconductor industry has shown significant momentum in recent years, with both the government and the business community actively promoting the growth of the industry. At the policy level, the India government has introduced a series of supportive policies, including direct subsidies and consortiums to promote industry development, to attract local and foreign companies to set up semiconductor factories in India and develop related industries. In particular, the India government launched a $10 billion chip industry incentive program in 2021 to build a semiconductor and display manufacturing ecosystem.
At the corporate level, several international semiconductor companies have shown strong interest in building factories in India. For example, Micron Technology announced an investment of $825 million in a semiconductor assembly and test facility in India. In addition, Tata Group has partnered with PSMC to build India's first large-scale chip manufacturing plant in the Dholera region of Gujarat, with a planned investment of about $11 billion, which is expected to produce 3 billion chips per year.
India has several advantages in developing the semiconductor industry, including huge domestic demand, demographic dividend and strong chip design capabilities. India's semiconductor market is growing rapidly and is expected to reach $64 billion by 2026. At the same time, India has a large number of integrated circuit designers, and a large number of engineering degree graduates every year, providing a rich talent pool for the semiconductor industry.
Figure: Is the semiconductor market rising in India
Although the development of India's semiconductor industry is full of potential, it also faces some challenges:
Infrastructure and funding gap: The semiconductor industry requires significant investment, as well as a stable supply of water and electricity and an efficient logistics system, which is a huge test for India's infrastructure.
Lack of supporting industries: India lacks a complete industrial chain for semiconductor manufacturing, and past attempts have repeatedly failed due to a lack of support from upstream and downstream related industries.
Policy and regulatory uncertainty: India's government involvement could affect manufacturing and technology development, and companies are wary of deep government involvement.
Lack of talent and technical experience: Although India has some strength in chip design, it has limited experience in chip manufacturing, especially in commercial production, and lacks program engineers and a highly trained skilled workforce.
International competition: Many countries and regions around the world are actively developing the semiconductor industry, and India needs to find its own position in the fierce international competition.
Although India had a late start in the semiconductor manufacturing sector, it has established a good foundation in design and R&D. Since 1985, almost all of the world's top 25 semiconductor design companies have set up R&D centers in India, especially in the southern city of Bangalore, where a large number of semiconductor design and R&D talents have been concentrated.
At present, the India semiconductor market is experiencing significant changes and growth, and factors such as government policy support, market demand growth, industrial foundation and human resources, international cooperation and project progress have jointly promoted the rise of India's semiconductor industry. However, to achieve a real rise and become a significant force in the global semiconductor industry, India needs to overcome a series of challenges and sustain efforts.
