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Is India The Next Semiconductor and Electronics Manufacturing Centre? Explained

Is India The Next Semiconductor and Electronics Manufacturing Centre? Explained

Since the semiconductor industry is one of the fastest-growing sectors globally, the high demands and increase in manufacturing costs have influenced the growth of the semiconductor industry in India. This article discusses the growth of the semiconductor industry in India and how it could become the next semiconductor manufacturing center.

Why Focus Has Shifted To India?

At a certain time, semiconductors were produced in large quantities sufficient to meet customer demand. Then came the covid-19 pandemic, which disrupted the entire semiconductor manufacturing process. Political roles began to influence the natural command of things, thus affecting the semiconductor command chain. Once the command chain became affected, semiconductor shortages became the order of the day. This shortage has spread worldwide, affecting various companies and electronic industries worldwide.

The shortage of semiconductors has slowed down the production of EVs and mobile phones. This has forced many companies to begin their chip production facility in recent years. However, some concerns are raised since most chip production centers are located in Taiwan, China, and Southeast Asia.

  • The USA’s sanction on tech industries in China
  • The crackdown of Chinese tech companies by the Chinese government
  • Dispute between China and Taiwan.

All these concerns stated above have played a role in the global production of semiconductors.

Is India the Solution For Semiconductor Shortage?

One interesting fact about India is its advancement in the semiconductor industry. They have attracted and welcomed various semiconductor manufacturers into their country, with the goal in mind to end semiconductor shortages.

No doubt India has been importing chips from China and other parts of southeast Asia. However, they began experiencing semiconductor shortages when customer demand began to increase. Current news speculation is that the Indian government has approved an incentive plan worth 10 billion dollars. The idea is to draw in semiconductor manufacturers worldwide to run their manufacturing centers in India. With this plan, India stands to become a semiconductor and electronic manufacturing center.

India will offer 50 percent production cost to manufacturers with eligibility in financial support. This is because many top foreign semiconductor manufacturing industries are keen on this new opportunity. These semiconductor manufacturing industries include Intel, United microelectronics corp, AMD, TSMC, and Tower Semiconductor.

There are so many semiconductor manufacturers from all over the world who want to participate in this project. One of India’s top semiconductor manufacturing companies, Tata Group, has chosen not to miss out on this opportunity. Tata Group is drawing up a plan to see them invest a whooping 300 million US dollars on the testing and assembly units.

When you might think that’s the highest amount a Semiconductor manufacturer can invest, another top semiconductor manufacturing company in India shows interest. Vedanta, a well-known company, plans to invest around 15 billion US dollars. Now you can see that it gets real from here on.

Currently, the value of India’s semiconductor industry has risen to 15 billion US dollars. By 2026, it is estimated to grow to 63 billion US dollars. Some of the critical areas that will be the forerunners of the semiconductor industry in India will include automotive electronics, wireless communication, and consumer electronics.

How Important Is Environmental Impact?

The government of India should also focus on environmental impact, not just creating a conducive environment for semiconductor production. Semiconductor production is water and electricity-intensive project. During the process, there are also many emissions of toxic gases. Taiwan, the largest manufacturer of semiconductors, was once affected by drought. So they began to order water to ensure it didn’t dispute the semiconductor manufacturing process.

Things like an adequate supply of water, electricity, and other environmental factors are what the Indian government should consider. Considering environmental impact will help sustain the semiconductor ecosystem in India.

Final Thoughts

In summary, the incentive the Indian government has offered semiconductor manufacturers will make India, a global semiconductor manufacturer in the long run. With the likes of foreign and local semiconductor heavyweights vying for this opportunity, it’s only a matter of time before the global shortage of semiconductors comes to an end.

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