How Global Chip Crisis can be an opportunity for India’s Semiconductor market to reach over USD 65 Bn by 2027?- Ken Research
India Semiconductor Market has been growing exponentially with a CAGR of 136% between FY’17 and FY’21 owing to the increasing adoption of Fin-tech in the country.
1. The sales for semiconductors increased to around $450 billion in 2020 and have been growing rapidly which has brought the world into a global chip crisis.
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A semiconductor is an important component of electronic devices that enables advances in computing, communication, military systems, automotive, and other countless applications. The supply chain was slowed down during the global pandemic which affected the sales of the semiconductor market globally. However, as the restrictions were given little relaxation, the market increased to around $450 billion as compared to the 2019 total of $412.3 billion owing to recent technological advancements trends such as hyper-scaler cloud computing, Artificial Intelligence (AI), Internet of Things (IoT), and automotive Advanced Driver Assistance Systems (ADAS), etc. However, the sudden increase in demand created a shortage of chips as it was impossible to meet the requirement at the same pace, post-pandemic.
2. The global chip shortage came as a big threat to countries like India which is a 100% import-driven market, growing at a CAGR of ~11%
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India is a 100% importer of semiconductors. It is only involved in the design, assembling, testing, and packaging of semiconductors. China, Taiwan, the USA, and Japan are some of the major countries that import semiconductors to India. As a result of complete dependency on foreign countries, the market was affected during the COVID-19 outbreak. This pushed India to take crucial steps in order to lower its complete dependency and become self-reliant.
3. India’s game changing move: INR Rs. 2,30,000 to position India as global hub for electronics manufacturing with semiconductors as the foundational building block
India’s vision to become self-reliant in the electronics & semiconductors market was given momentum by approving the Semicon India program with a total outlay of INR 76,000 crore for the development of the semiconductor and display manufacturing ecosystem in India.
Moreover, incentive support to the tune of Rs.55,392 crore (7.5 billion USD) has been approved under PLI for Larges Scale Electronics Manufacturing, PLI for IT Hardware, SPECS Scheme, and Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme. In addition to this, the PLI incentives to the quantum of Rs.98,000 crore (USD 13 billion) are approved for allied sectors comprising ACC batteries, auto components, telecom & networking products, solar PV modules, and white goods. In total, the Indian government has committed support of Rs. 2,30,000 crore (USD 30 billion) to position India as a global hub for electronics manufacturing with semiconductors as the foundational building block.
4. Expansion of chip manufacturing plants, and Strategic international joint ventures will enable the Indian semiconductor industry to experience double-digit growth in the future.
India is planning to expand chip manufacturing plants. International semiconductor consortium (ISMC), a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor, plans to invest Rs 22,900 crore ($3 billion) in a chip fab. In May 2022, it signed an agreement with the Karnataka government to set up an Electronics Manufacturing Cluster over 150 acres of land in the Kochanahalli Industrial Area. Owing to the expansion of chip manufacturing plants in the country and increasing design centers, the semiconductor industry in India is expected to grow at a CAGR of ~20% from 2023 to 2027. So, the bottom line is, along with the rising domestic demand for electronic products, the increasing number of collaborations with global players, and the Indian government’s encouraging policies, India’s future of becoming a global leader in the semiconductor manufacturing industry looks promising and a near possibility.
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