India Semiconductor Industry Growth
With India’s growing focus on technological advancements and self-reliance, the country has witnessed a remarkable influx of innovative tech start-ups over the recent years. Right from the adoption of electric vehicles to the incorporation of drones and from the ascension of private players in space technology to a significant push of private funding in novel technologies, these accomplishments highlight the dynamic landscape of the tech industry in India.
Several global and regional players intend to capitalize on India’s commitment to build domestic semiconductor capacity and drastically alleviate imports. The growing geopolitical unease between Beijing and Washington has prompted electronics manufacturers, including chip manufacturers, to expand beyond China and Taiwan, with India appearing as a key beneficiary. India offers an exceptional combination of talent, a rapidly growing market, and a democratic framework, exhibiting a unique opportunity for investors. At present, the country is a front-runner in policy stability.
According to a study by IMARC, the Indian semiconductor Industry is expected to exhibit a CAGR of 9.5% during 2024-2032. India’s semiconductor ecosystem has attained a noteworthy thrust, driven by the government’s support for semiconductor design and packaging companies and fabless chip manufacturing startups. The India Semiconductor Mission (ISM) was initiated in 2022 to develop a robust semiconductor and display ecosystem to reinforce the country’s emergence as a global hub in the manufacturing and design of electronics. Furthermore, the Semicon India Future Design: Design Linked Incentive (DLI) Scheme was introduced by the government to offer funding and design infrastructure support at different phases of semiconductor manufacturing and implementation.
Wave of Investments: Current Events in Semiconductor Sector for an Incredible Future Impact
Government Support
The Indian government plays a vital role in drawing investments and fostering international alliances.
Billion-dollar Investment: In September 2024, Prime Minister Narendra Modi, in a roundtable with CEOs of leading tech companies in the United States, highlighted India’s escalating prowess in emerging tech arenas and announced an investment of US$ 15 Billion in the country’s semiconductor sector.
Infrastructural Development: The Union Cabinet of India announced the approval of a ₹3,300 crores investment for a new semiconductor manufacturing unit by Kaynes Semicon Pvt. Ltd in Gujarat, highlighting the government’s assurance toward infrastructure development.
Global Collaborations: United States and India Team up for National Security
In a significant breakthrough, the United States and India have entered into a strategic collaboration to develop a semiconductor plant in India (to be located in Jewar, Uttar Pradesh) that will address the chip demand for national security and defense applications. The initiative is backed by the India Semiconductor Mission and marks one-of-a-kind collaboration between the two countries in semiconductor technology. The initiative involves the efforts of Bharat Semiconductors, 3rdiTech, and the United States Space Force. The United States military is, for the first time, sharing critical technologies with India, developing a multi-material fabrication unit for national security. The new facility, named ‘Shakti’ tentatively, will be located strategically near the upcoming Jewar Airport. This collaboration possesses the potential to not only augment the chip-making capabilities of India but also strengthen United States-India ties in defense technology.
Domestic Tech Giants Taking the Lead
Tata Electronics entered into a strategic collaboration with Taiwan’s PSMC to construct the first chip factory of India in Dholera, Gujarat. PSMC will offer its design and development expertise for the greenfield fab, with a planned monthly production capacity of up to 50,000 wafers. The chips manufactured at the fab will cater to areas including AI, automotive, wireless communication, and computing, addressing the surging global demand.
India’s first silicon carbide manufacturing facility is planned to be set up in Odisha by RIR Power Electronics Limited, a leading company in the semiconductor power electronics sector in India. The planned investment for this project is over ₹620 crores. According to Mohan Charan Majhi, the Chief Minister of Odisha, the establishment of the facility by RIR is another significant step in the ongoing journey to make the state a leading semiconductor hub in India.
Engineering conglomerate L&T has announced the creation of a chip design firm and a planned investment of over $300 million. The tech-to-construction company planned to invest the amount over three years to build a fabless chipmaker, for in-house designing and selling of semiconductors and outsourced production alliances. L&T has also announced to design over 15 products by the end of 2024 and start sales by 2027.
Zoho’s recent application for a semiconductor venture marks a significant step for the domestic tech sector’s involvement in India’s pursuit of semiconductor manufacturing self-reliance. The project is presently in its developmental phases and the company is assessing different options and executing feasibility studies with partners as well as finalizing the project location.
All Eyes on Maharashtra
Maharashtra is India’s first state to have a semiconductor policy and create an ecosystem for it.
Maharashtra’s first semiconductor manufacturing unit was inaugurated in Navi Mumbai. RRP Electronics Ltd. (a company backed by former cricketer Sachin Tendulkar) has invested over ₹12,035 crores in the plant and planned to invest an additional ₹24,538 crores.
Maharashtra’s cabinet approved the ₹83,947 crore proposal of Adani Group to build a semiconductor manufacturing plant in Panvel, in collaboration with Israel’s Tower Semiconductor. The plant will have a planned monthly production capacity of 40,000 wafers, which will reach 80,000 wafers per month after the second phase.
Start-ups Stepping Up
In February 2024, the Ministry of Electronics and Information Technology (MeitY) approved the application of Saankhya Labs to the Centre’s DLI scheme for the development of a System-on-Chip (SoC) for integration in 5G telecom infrastructure equipment.
In 2023, the Ministry of Defence signed a contract with AGNIT Semiconductors for designing and developing innovative GaN semiconductors, scheduled for integration into the next-gen wireless transmitters in defense applications, such as radars and electronic warfare jammers.
CalligoTech has developed a co-processor that can do precise computations with the help of a new number system called Posit (invented in 2017). In June 2024, the startup announced an 8-core Posit-driven RISC-V CPU named TUNGA. The company claims to be the first in the world to do so.
Morphing Machines, a fabless semiconductor start-up, has received projects under Chips2Startup (C2S) and DLI from the MeitY. In June 2024, the company secured a seed funding round of US$ 2.76 Million led by Speciale Invest.
The Brighter Future
As India continues to make strides in its semiconductor ambitions, the future appears to be promising. The supportive government initiatives, a flourishing start-up ecosystem, global collaborations, and investments from the private sector are laying a robust foundation for a progressive semiconductor ecosystem in the country. Despite the challenges of high capital costs and supply chain vulnerabilities, India is poised to emerge as a major player in the global semiconductor industry. Continued investment in training is expected to nurture emerging talent and ensure a constant supply of skilled workforce essential for executing the planned projects. Further differentiating itself from the global competitors through cost-competitiveness and innovation will help the country succeed in an ever-changing global landscape.
