Overview of India's Semiconductor Industry: India is on a transformative path to become a important player in the global semiconductor market. As the world’s fifth-largest economy, India is pushing towards self-reliance in manufacturing, especially in the semiconductor sector. With an ambitious vision set by Prime Minister Narendra Modi, the country aims to grow its electronics sector from a current valuation of $155 billion to a stunning $500 billion by 2030. This vision underscores the importance of establishing semiconductor plants in India to produce semiconductor devices and meet domestic and global demand.
Importance of Semiconductor Plants: Semiconductor plants are essential for producing the chips that power everything from laptops and smartphones to advanced machinery and electric vehicles. Given the increasing demand for technology in daily life and various industries, establishing plants for semiconductor manufacturing in India is vital. These plants not only strengthen domestic production, but they also reduce reliance on imports and contribute to economic growth and job creation.
Current State of Semiconductor Manufacturing in India
Background of Semiconductor Manufacturing in India: The semiconductor manufacturing journey in India has been relatively emerging. The country has primarily relied on imports for its semiconductor needs, with a significant percentage of chips sourced from established players like China and Taiwan. Despite this, India's landscape is changing and the government is focused on developing a strong semiconductor ecosystem to meet both domestic and international demands.
Current Market Size and Growth: As of 2023, the Indian semiconductor market value is approximately $34.3 billion which is projected to grow to $100.2 billion by 2032 as per the expert analysis. This growth reflects a compound annual growth rate (CAGR) of around 20.1%. Such expansion indicates an increasing reliance on semiconductors across various sectors, particularly with the rise of electric vehicles, IoT devices and advanced communication technologies.
Government Initiatives and Policies
Government Policies: The Indian government has recognized the strategic importance of semiconductors and has rolled out various initiatives to boost domestic manufacturing. Policies such as the "Development of Semiconductors and Display Manufacturing Ecosystems in India" aim to provide the necessary structure and incentives for semiconductor plants to thrive. The manufacturing experts have highlighted the benefits of the India's new schemes and policies for the electronics industry in a recent interview with industry specialists. This initiative aims to make India as a universal electronics hub, with an allocation of Rs. 2,30,000 crore (approximately USD 30 billion). It supports semiconductor plants in India including display fabs, silicon fabs and semiconductor packaging, highlighting trusted sources for national security. Additionally, the program includes a design-linked incentive scheme to encourage startups, creating skilled job opportunities and enhancing India's integration into the global value chain.
Investment Strategies and Funding Initiatives: The Indian government is heavily investing in the semiconductor industry to strengthen domestic manufacturing. As part of its strategy, financial incentives have been introduced, covering up to 50% of plan costs for companies that are setting up semiconductor plants in India. This initiative is designed to attract global tech companies and encourage local manufacturing. The Union Cabinet has approved the establishment of three new semiconductor plants, which are expected to create 20,000 job opportunities directly. Additionally, these projects could generate indirect employment opportunities for up to 60,000 people, benefiting a broad range of related industries.
Collaborative Efforts with Other Countries: India is also building partnerships with various countries to boost its semiconductor manufacturing skills. Working together with nations like the Taiwan and U.S. is essential to learn how to create advanced semiconductor plants and for gaining the new technology. For instance, the Micron Technology, American chipmaker is planning to introduce its first semiconductor chip plant in India by 2025. This highlights how important it is to have international teamwork in this field.
Moreover, India is keen on learning from established semiconductor hubs. Collaborations may involve sharing knowledge, training programs and joint research initiatives that can lead to innovation. The Indian government is actively seeking to attract global players to invest in these projects, which will not only enhance technical capabilities but also create job opportunities for the nation’s workforce. Overall, these efforts are crucial for India to position itself as a competitive player in the global semiconductor landscape.
Key Semiconductor Manufacturing Plants in Development
With government-approved status, the following are the top listed semiconductor manufacturing companies in India and overseas that are currently developing new plants to expand their production capabilities, with several plants under construction expected to begin production by the end of 2024 and the beginning of 2025.
Tata Electronics and Powerchip Semiconductor Manufacturing Corp (PSMC) - Dholera, Gujarat
Tata Electronics is partnering with Taiwan’s Powerchip Semiconductor to build India’s first large-scale semiconductor fab in Dholera. With an investment of ₹9,100 billion (around US$109 billion), the plant will focus on producing high-performance computing and power management chips. The facility aims to produce 50,000 wafers monthly to meet the demand in sectors like electric vehicles and telecommunications.Tata Semiconductor Assembly and Test Pvt Ltd (TSAT) - Morigaon, Assam
In Morigaon, Tata Semiconductor Assembly and Test Pvt Ltd (TSAT) is establishing an advanced packaging facility. With an investment of ₹2,700 million (around US$326 million), this ATMP unit will cater to industries such as automotive, consumer electronics and telecommunications, helping to reduce India’s reliance on imported semiconductor components.CG Power and Renesas Electronics Corporation - Sanand, Gujarat
In Sanand, Gujarat, CG Power is collaborating with Japan’s Renesas Electronics and Thailand’s Stars Microelectronics to set up another ATMP unit. This ₹760 million (about US$91 million) project will focus on producing specialized chips for sectors like consumer electronics and automotive, with a daily capacity of 15 million chips, strengthening India's semiconductor capabilities.Micron Technology - Sanand, Gujarat
Micron Technology is building a semiconductor unit in Sanand, Gujarat, which is advancing quickly. The facility is set to produce memory and storage chips starting in 2025. This project, costing $2.75 billion, is backed by $825 million from Micron and additional funding from the government. The focus will be on creating products mainly for export, helping to strengthen India’s position in the global semiconductor market.Kaynes Semicon - Sanand, Gujarat
Kaynes Semicon is developing an OSAT (Outsourced Semiconductor Assembly and Test) unit with a ₹3,307 crore (US$400 million) investment. Partnering with global firms like LightSpeed Photonics and AOI Electronics, this facility aims to produce 1 billion chips annually within five years, with a strong focus on power electronics and industrial applications.Suchi Semicon - Surat, Gujarat
Suchi Semicon is set to commence production at its advanced OSAT facility in Surat by November 2024. With an investment of ₹3,000 crore, this hi-tech plant features Class 10k and 100k cleanrooms and aims to create 1,200 jobs while focusing on cutting-edge semiconductor assembly and testing technologies to support various industries. In a recent interview with Suchi Semicon's Managing Director, Mr. Ashok Mehta, he shared his vision for boosting India’s semiconductor design capabilities and highlighted the important role the company aims to play in this process.Foxconn-HCL Joint Venture (Pending Approval)
This proposed OSAT unit by Foxconn and HCL Group is currently awaiting final approval. The facility aims to utilize Foxconn's expertise in electronics manufacturing.ASIP and Korea’s APACT (Pending Approval)
A joint venture between ASIP Technologies and Korea’s APACT is also pending approval for an OSAT facility in Sanand. The focus of this plant will be on system-in-package (SiP) technologies.Tarq Semiconductors (Pending Approval)
Tarq Semiconductors, a company owned by the Hiranandani Group, is seeking approval for an ATMP facility and a compound semiconductor unit. This project is intended to enhance India's capabilities in advanced packaging and compound semiconductor production.
Global Context and Competition
India's goal to become a leader in semiconductor manufacturing comes among strong competition from global giants like Taiwan, China, South Korea, the U.S. and Japan. Taiwan dominates the market with around 44% of the global share, followed by China at 28%. These countries have well-established semiconductor industries with decades of experience. To compete effectively, India must rapidly develop its manufacturing capabilities while learning from the successful strategies and technologies of these major players. Collaborations, technological advancements and government support will be key for India to find a significant role in the global semiconductor industry.
Collaborations and Partnerships
International Collaborations: India's strategy includes building international collaborations to enhance its semiconductor manufacturing capabilities. The ongoing partnership with Taiwanese companies like PSMC and collaborations with U.S. firms reflect the need for India to leverage global expertise and technology.
U.S. and India Partnerships: The U.S. has expressed strong interest in partnering with India to expand its semiconductor sources and reduce dependence on Taiwan and China. Recently, the U.S. Department of State announced a partnership with the India Semiconductor Mission to improve the global semiconductor value chain. This collaboration is expected to strengthen both countries positions in the semiconductor landscape, especially in ongoing geopolitical risks.
Economic and Employment Impact
Job Opportunities: The establishment of semiconductor plants in India is expected to create a large number of jobs across various sectors. By 2026, it's estimated that over 300,000 job opportunities will be available, covering roles such as engineers, testers, software developers and operational staff. These jobs will not only support semiconductor production but also open up employment in connected fields, helping local talent grow in technical and managerial positions. This flow in job creation is vital to utilizing India’s young workforce, driving both economic growth and skill development.
Positive Effects on Related Industries: The growth of the semiconductor industry will positively impact other sectors like automotive, electronics and telecommunications. As semiconductor manufacturing expands, these industries will see increased demand for components and new technologies, leading to innovations in their products and services. Additionally, companies working in research and development (R&D) will be able to explore advanced technologies, creating more opportunities for investment and collaboration. The overall result will be a boost to multiple industries as they adopt cutting-edge technologies, enhancing India’s technological part.
Economic Growth: Constructing of semiconductor manufacturing plants in India will also contribute to strengthening the country's economy. By increasing its manufacturing capacity, India can focus on producing components for export, which will integrate the nation more deeply into global supply chains. This effort is part of India’s broader plan to increase its share in the global technology market. As semiconductor manufacturing grows, it will lead to more investment, higher productivity and economic growth, helping India become a hub for advanced manufacturing on the global phase.
Future Outlook and Challenges
Market Forecasting: India's semiconductor industry is projected to grow rapidly over the next decade. From $34.3 billion in 2023, it is expected to reach $100.2 billion by 2032, driven by demand from sectors such as electronics, automotive and telecommunications. Experts of India highlight the importance of a resilient supply chain to support this growth, particularly in strengthening the electronics industry for global competitiveness. Initiatives like “Make in India” and “Digital India” are boosting this growth by encouraging domestic production and innovation. As India's digital economy expands, the demand for semiconductor products will increase, particularly in advanced technologies like AI, IoT and 5G, positioning the country for substantial market potential in the global semiconductor landscape.
Challenges: Despite the promising outlook, India faces several challenges in its semiconductor journey. Building the necessary infrastructure, acquiring advanced technology, and attracting foreign investments are key hurdles. India’s semiconductor industry is in its early stages, and establishing a strong manufacturing base requires significant capital, expertise and time. Furthermore, global competition from countries like Taiwan and China, which dominate the semiconductor space, presents an additional challenge. To succeed, India must continue to invest in its semiconductor ecosystem, improve its technological capabilities and create a favorable business environment for both local and foreign players.
For India to successfully position itself as a global semiconductor hub, attracting more foreign investments will be essential to finance the capital-heavy semiconductor fabs. The country also needs to enhance its technological capabilities to keep pace with established global leaders. Improving the business environment is another crucial step, including simplifying regulations, offering incentives and promoting innovation. These initiatives will not only assist growth but also ensure that India becomes a competitive player in the global semiconductor landscape, driving innovation and economic development in the coming years.
Conclusion
Key Findings: India is making significant strides toward becoming a leading player in the semiconductor industry, driven by government initiatives, international collaborations and the establishment of key semiconductor plants. With ambitious goals for growth and development, the country's semiconductor landscape is set for a transformation.
Final Thoughts: The increase in chip manufacturing companies in India presents a unique opportunity for the nation to enhance its technological capabilities, create job opportunities and contribute to economic growth. By leveraging its strengths and addressing existing challenges, India can strengthen its position in the global semiconductor value chain and pave the way for a brighter future in technology.
