Workers assemble smartphones at the Dixon Technologies factory in Uttar Pradesh, India, on January 28, 2021.
India is set on becoming a significant player in the semiconductor industry, aiming for self-reliance in manufacturing. Prime Minister Narendra Modi has laid out ambitious goals for the country’s semiconductor sector, including a target to grow the electronics industry from its current $155 billion to $500 billion by 2030.
This announcement has sparked debate among industry experts regarding its feasibility. While opinions vary, there is consensus that India will need international assistance to achieve this objective. Eri Ikeda, an assistant professor at the Indian Institute of Technology Delhi, noted that India is just beginning its journey in semiconductor development.
Currently, Taiwan leads the global semiconductor market with a 44% share, followed by China (28%), South Korea (12%), the U.S. (6%), and Japan (2%), according to data from Taiwanese consultancy Trendforce.
The partnership between Taiwan’s Powerchip Semiconductor Manufacturing Corporation and India’s Tata Electronics to build a 12-inch wafer fab in Gujarat is one example of international collaboration. Additionally, American chipmaker Micron Technology plans to roll out India’s first semiconductor chip in 2025. Analog Devices and Tata Group have also signed an agreement to explore semiconductor production in India.
India is considered a viable alternative to China for diversifying supply chains amidst geopolitical tensions. However, analysts assert that India must first build foundational knowledge in semiconductor manufacturing before competing with China. China, which recently became India’s top trading partner again, holds a significant lead in semiconductor manufacturing.
Rishi Bhatnagar, chair of the Institution of Engineering and Technology’s future tech panel, emphasized the need for collaboration between India and China. Both countries are making strides in semiconductor technology by importing large amounts of equipment from the U.S. and Japan.
India plans to collaborate with the U.S. to enhance the global semiconductor value chain, as announced by the U.S. Department of State in partnership with India Semiconductor Mission and India’s electronics and IT government body. This collaboration is part of a broader strategy to counter China’s advancements in critical technologies.
India’s engagement with U.S. companies like Nvidia and Google, whose CEOs recently met with Modi, highlights the South Asian nation’s efforts to boost its semiconductor capabilities. This collaboration is seen as beneficial for both India and the U.S., providing diversification in chip sources away from Taiwan.
Biden’s administration announced a $90 million investment in AI and semiconductor-related technology with India over the next five years. This move is part of a broader strategy to strengthen the U.S.’s position in its ongoing “chip war” with China.
Despite these strategic moves, India faces significant challenges in competing with China, particularly in infrastructure and investment. Piyush Goyal, India’s Minister of Commerce and Industry, stated that the country is building the necessary ecosystem to support the semiconductor industry.
India has several advantages, including a low labor cost, which makes it an attractive destination for companies looking to diversify away from China. The monthly minimum wage in New Delhi for skilled workers is significantly lower than in Beijing.
Analysts predict that as India continues to modernize its infrastructure, including highways, railways, and airports, its attractiveness as a manufacturing hub will increase. Finance Minister Nirmala Sitharaman estimated a substantial rise in capital expenditures for infrastructure development in the fiscal year 2025.
As the need for semiconductors grows, India’s potential as a cost-effective and reliable manufacturing hub could appeal to many companies. Samir Kapadia, CEO of India Index and Managing Principal at Vogel Group, expressed confidence in India’s ability to achieve its semiconductor goals, citing the right mix of infrastructure, economics, stability, and workforce as key factors.
The Indian government remains optimistic that these combined efforts will lead to substantial growth in its semiconductor industry, enabling the country to meet global demand and achieve its ambitious targets.