Industry Emphasizes Benefits of India’s Growing Role in Global Semiconductor Value Chain

Last week, the government approved three major semiconductor projects with an estimated investment of Rs 1.26 crore in Gujarat and Assam. According to a report by the Information Technology and Innovation Foundation (ITIF), the move comes as India is poised to expand its role in global semiconductor value chains.

The report, titled “Assessing India’s Readiness to Play a Greater Role in Global Semiconductor Value Chains”, highlights India’s potential to significantly increase its presence in the semiconductor industry. The report urges India to seize the opportunity to strengthen its position in global semiconductor value chains due to its large and growing consumer and business markets, as well as strengths in electronics production and global supply chain balancing.

According to the ITIF report, India could set up up to five semiconductor assembly, test and packaging (ATP) facilities in the next five years, while attracting companies that produce legacy semiconductors at 28nm and above. This expansion would leverage India’s extensive experience in semiconductor engineering, where it currently employs 20 percent of the world’s integrated circuit (IC) engineering workforce and employs more than 125,000 people.

However, the semiconductor industry has a global shortage of skilled workers. Although more than 800,000 engineers graduate from India every year, only a small proportion are considered ready for industry upon graduation. The report highlights the need for better courses, training and capabilities to bridge this gap and tap into India’s engineering talent. So the industry believes that with major chip companies showing interest in India and supportive policies, the nation is poised to improve its technological capabilities and expand its capabilities.

An Indian perspective

Commenting on the report and the semiconductor ecosystem, Sanjay Gupta, President, India Electronics and Semiconductor Association (IESA) while speaking to ReturnByte highlighted the thriving nature of the country’s ecosystem.

Gupta noted that many stakeholders, including electronics companies, semiconductor companies and software companies, are actively engaging with the ecosystem. He highlighted that Indian semiconductor manufacturing spans a wide range of industries, including chemical and gas companies, highlighting the holistic nature of the ecosystem.

Gupta noted India’s emergence as a viable option in the global semiconductor value chain: “While countries like Singapore, Korea, Hong Kong, Japan and Malaysia excel in logistics and infrastructure, India offers unique advantages such as its demographic profile and scalability.”

India is predicted to remain the youngest country in the world for the next four decades coupled with its scalability, Gupta assured that India is poised to emerge as a major player in the semiconductor industry. Regarding the requirements for semiconductor manufacturing, Gupta outlined 10 critical factors, including uninterrupted power and water supply, robust logistics infrastructure, availability of talent, and government support for clearances and visas.

He also highlighted India’s track record of maintaining stable policies, which has instilled confidence in global investors. He pointed out that leadership in government is also one of the key factors influencing political stability, which attracts large investments.

Speaking about the report, he further emphasized the importance of India’s domestic market in driving semiconductor consumption. He pointed out that while other countries may be heavily dependent on exports, India’s economy is poised to flourish with domestic consumption. According to forecasts, semiconductor consumption will increase significantly in the country, and he highlighted India’s potential to establish a self-sustaining semiconductor industry that will serve local needs. He argued that this would not only reduce dependence on imports but also contribute to the stability of the Indian economy by reducing the fiscal deficit and currency devaluation risks.

Echoing Gupta’s sentiments, IESA President Ashok Chandak also said, “Given its fast-growing domestic market, well-developed engineering ecosystem, supportive government policies and coordinated industry collaboration to reach global markets, this moment presents a unique opportunity to set up semiconductor manufacturing in India. The report highlights India’s tremendous progress towards becoming a prime destination for electronics and semiconductor manufacturing, leveraging its strong semiconductor design ecosystem.

However, the report also aims to inform the government’s efforts to deepen trade relations between the US and India in the semiconductor sector, highlighting the fact that in recent years companies have switched to a “China plus one” or “China plus two” strategy to strengthen their supply chain flexibility.

John Neuffer, President and CEO of the Semiconductor Industry Association (SIA) said, “This is an exciting time for the semiconductor industry and for the US-India strategic partnership. India is already an important link in the global semiconductor supply chain and has the opportunity to expand its role in our industry. While global competition for semiconductor investment is fierce , India’s value proposition is strong.”

All in all, it is known that with government support and industry cooperation, India has good opportunities to strengthen its foothold in the global value chains of semiconductors, which will promote the country’s technological development and economic growth.