The demand for semiconductors has experienced a notable surge in recent years, driven by factors such as the widespread adoption of 5G technology, growing popularity of cryptocurrency mining necessitating a higher quantity of processing units, and the government's persistent efforts towards digitalization. Drawing from the lessons learned during the pandemic, the industry is also focused on developing systems that can mitigate the impact of unforeseen events and disruptions. Furthermore, strained relations between the United States and China have also contributed to the supply shortage, as China is a major chip manufacturer. 

The Indian semiconductor market was valued at approximately $23.2 Bn and is projected to reach $80.3 Bn by 2028, growing at a compound annual growth rate (CAGR) of 17.10% during the forecast period.  

Considering the continuous rise in demand for semiconductors, India, with its population of over 1.4 billion and robust education system, has the potential to become a talent powerhouse in the semiconductor industry and help alleviate the acute shortage of skilled professionals. 

Further, to support semiconductor research and development (R&D) in India, the Ministry of Electronics and IT (MeitY) has announced a $10 Bn investment in the India Semiconductor Mission (ISM), demonstrating the government’s intention to establish a foothold in the semiconductor market. The investment includes capital, incentives for manufacturing, and the Design Linked Incentive (DLI) scheme, which aims to assist Fabless startups in developing products for both domestic and global markets. 

Becoming the next semiconductor superpower is not devoid of challenges. India’s comparatively exorbitant pricing of land, power and labour has previously deterred investors from choosing India as a viable trade partner. However, incentives and subsidies being offered by the government of India aim to provide for a conducive environment to make India a desirable location for semiconductor manufacturing.  

Key Government Initiatives to Accelerate Semicon Manufacturing Growth in India 

Recognizing the significance of the semiconductor industry, the Indian government has implemented various measures and policies. The 'Make in India' initiative, initiated in 2014, aims to boost manufacturing in India and establish the country as a global manufacturing hub. Several initiatives have been launched to promote semiconductor production, including the Production Linked Incentive (PLI) scheme for the electronics sector. This scheme offers a $1.7 Bn incentive package for companies establishing semiconductor manufacturing facilities in India, making it a groundbreaking initiative. This new policy will not only benefit semiconductor companies but also generate indirect and specialized job opportunities. 

Additionally, the government has introduced the Design Linked Incentive (DLI) and other schemes such as Chips to Startup (C2S) and Scheme for Promotion of Electronic Components and Semiconductors (SPECS) to support the industry.  

Furthermore, the government has launched the "Semicon India program" to address the global chip shortage by encouraging manufacturers to establish their semiconductor industry setups. 

India's greatest asset lies in its vast reservoir of highly skilled and talented workforce 

In recent years, India has made remarkable strides in the semiconductor industry and has become one of the leading countries with a highly skilled pool of semiconductor design engineers. Indian engineers account for around 20% of the world's semiconductor design workforce, with over one lakh VLSI Design Engineers working in both global semiconductor companies and domestic design service companies. They contribute to cutting-edge chip development as part of global teams and independently. Indian engineers play a significant role in various stages of the design process, from specifications and architecture to physical implementation, verification, manufacturing support, and post-Si testing and qualification. 

To ensure a skilled workforce for the future, the government has also launched programs to develop and nurture talent in the semiconductor industry. The All India Council for Technical Education (AICTE) has made curriculum changes, and industry participation is crucial in this area to further enhance and support the talent pool. 

Foreign interest in India’s Semiconductor Mission  

Leading American semiconductor companies have made significant investments to support ISM, marking the beginning of a new era of collaborative innovation. The partnership between India and the United States aims to strengthen semiconductor supply chains and establishes a collaborative mechanism between the two governments to enhance the resilience and diversification of semiconductor supply chains. 

A massive India-specific investment plan by Micron Technology, one of the world's largest chip makers, following the US visit of Honourable Prime Minister Shri Narendra Modi betokened that India is the next important location for semiconductor manufacturers. 

Micron Technology has announced an investment of over $800 Mn to construct a new semiconductor assembly and test facility in Gujarat, India. The facility is expected to significantly reshape India's semiconductor landscape while creating numerous high-tech and construction jobs

Further, interest has been generated from Applied Materials, headquartered in California's Silicon Valley and a leader in materials engineering solutions for chip and display production, which plans to establish a collaborative engineering centre in Bengaluru, India. The centre will serve as a hub for applied engineers, global and domestic suppliers, and research and academic institutions to collaborate in accelerating the development of semiconductor equipment sub-systems and components. It will also contribute to training and developing future talent in the semiconductor industry, opening new opportunities for India to play a larger role in the global chip ecosystem

Lam Research Corporation, based in Fremont, has also announced its commitment to train the next generation of semiconductor engineers in India. The program aims to educate up to 60,000 Indian engineers in nanotechnologies over a 10-year period, supporting India's goals in semiconductor education and workforce development.  

Furthermore, the US Semiconductor Industry Association and India Electronics Semiconductor Association (IESA) have jointly released an interim readiness assessment to identify immediate industry opportunities and facilitate long-term strategic development in complementary semiconductor ecosystems

India's talent pool is unparalleled, and the country is currently at a crucial point where manufacturing can grow rapidly and efficiently. Additionally, India has the intellectual capacity, determination, and capability to emerge as a leading global research and development hub. It remains focused on its objective of strengthening the semiconductor industry, which, in turn, will stimulate the growth of the country's expanding electronics manufacturing and innovation ecosystem. 

The blog has been Co-authored by Shubhra Pandey.