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The global semiconductor shortage has crippled several industries dependent on chips, and India is trying to cash in on the opportunity by developing chip manufacturing locally. India’s semiconductor industry is currently in a very nascent stage, but India’s diplomat to Taiwan this week said that the country is planning to invest $30 bn to overhaul its tech industry and build a chip supply chain.
“There is a rise in demand for semiconductors,” said Gourangalal Das, director-general of the India-Taipei Association, during an interview. India’s chip demand is doubling each year. “By 2030, India’s semiconductor demand will reach $110 billion. So by that time, it will be over 10% of global demand.”
The hefty investment plan will focus on increasing the production of locally made semiconductors, displays, advanced chemicals, networking and telecom equipment, batteries, and electronics. India’s ambitious plan aims to shed reliance on foreign suppliers, and Das said the country does not want to be held ‘hostage’ for the supply of chips.
India semiconductor market
The global chip industry is expected to reach about $600 bn in 2022, as per a Deloitte report. The Indian Electronics and Semiconductors Association (IESA) sees the country’s semiconductor market to swell to $64 bn in 2026, more than double the estimated value of $27 bn in 2021.
The US and the European Union are also attempting to reduce dependence on China, Taiwan, and Vietnam for chip manufacturing, and are exploring local production of cutting-edge semiconductors. India has different plans, and Das told media persons that the country will focus on bringing in ‘mature’ chips. The South Asian country wants to locally produce 65-nanometer to 28-nanometer chips that are widely used in connectivity chips, display drivers, and controller chips for electronics and electric vehicles.
Following India’s semiconductor push, the International Semiconductor Consortium (ISMC), a joint venture between Abu Dhabi-based NextOrbit Ventures and Israel-based Tower Semiconductor, has signed a memorandum of understanding (MoU) with the Karnataka (Indian state) government to invest $3 bn in a 65 nm analogue semiconductor fabrication plant. The site is likely to start chip production in the next four years if everything falls into place.
India is looking to collaborate with foreign players and is inviting companies to set up semiconductor fabs in the country. Apple supplier Foxconn has partnered with mining firm Vedanta to build a semiconductor plant in the country. Vedanta’s Chairman Anil Agarwal last month said that the company will unveil its plans for the $20 bn semiconductor and display plant in June, with the first chip product expected to roll out within the next two years.
“India needs to import $15 billion worth of semiconductors. It’s because of the shortage of semiconductor that we haven’t been able to run our factories at 100%. We are manufacturing glass and optical fibre. So, it was natural for us to move into semiconductors,” Agarwal told a local publication.
Additionally, the Indian government has approved a $10 bn incentive plan to attract semiconductor and display manufacturers. The government also plans to extend fiscal support of up to 50% of the project cost to eligible fabricators.
India’s new plan for chips
Das, the Indian diplomat in Taiwan, said India was exploring the production of LCD and OLED displays, adding that the country has ample tech talent to take up this challenge. India has a target of producing 85,000 highly qualified engineers in the next decade.
Of the $30 bn earmarked for the tech overhaul and chip production, $10 bn will be used for two chip facilities and two display plants. Another $7 bn will be given to the electronics industry. The rest $13 bn will be used for telecom, networking, solar PVs, advanced chemistry, and battery cells, clarified Das.
“Even though India has not gone into the semiconductor (industry) in a big way, it has all the associated industrial capabilities, which can be tweaked a little bit or upgraded a little bit to meet the demands,” Das said in the interview.
