Indias Path to Semiconductor Leadership
Published on : Tuesday 01-10-2024
The future looks promising for India's role in the semiconductor market, says Vikram Meghal.
Artificial intelligence is the hottest topic in technology. But AI and other high-tech innovations can’t exist without computer chips. Advances in critical areas like AI, automotive, and industrial applications are anticipated to drive the semiconductor industry to reach $1 trillion by 2030.
Taiwan, with TSMC's specialised chips, and the US, home to major semiconductor companies like NVIDIA, Intel, Broadcom, and AMD, have long dominated this strategically important and lucrative industry. However, the vast amounts of wealth at stake and geopolitical considerations have sparked a global gold rush, with countries worldwide rushing to grab a share of the market.
India is among the leading countries seeking to make significant strides in the semiconductor industry. The government’s initial $10 billion incentive package has attracted major companies to set up manufacturing as well as outsourced assembly and testing (OSAT) units. Now in the second phase of commitment, the government has increased the incentive package to $15 billion.
This initiative is part of a broader strategy to reduce dependency on imports and boost the domestic technology ecosystem. Even modest progress in chip manufacturing would create thousands of jobs and position India as a key player in the global semiconductor supply chain.
The world is only now recovering from the Covid-19 era chip shortage, particularly for the specialised chips such as those used in connected, autonomous, and electric vehicles. And the industry fears future shortages for chips as the technology all around advances. As a result, many tech-savvy countries want to gain greater control over the vagaries of these on-again, off-again crises.
The rise of the global semiconductor industry
As fundamental building blocks of modern technology, semiconductor chips have become increasingly important as electronics permeate every part of our personal and work lives. From Industry 4.0 to 5G to AI, the chip is behind it all. It is in wearables, cars, home appliances, and assembly lines. Despite suffering from overproduction, supply chain disruptions, and chip wars, the semiconductor industry now seems to be stabilising, driven by several key growth areas:
- 5G networks and IoT that enable smarter homes, industries, and cities.
- AI and machine learning applications, from smart assistants to advanced data analytics, and modern consumer and medical devices.
- ADAS and autonomous vehicles, electric vehicles, and robotics, and
- Defense systems.
Factors boosting the Indian semiconductor industry
India is not starting from scratch. The country has been a key player in the chip design, validation, and application-specific IC design part of the semiconductor market business for years. This progress is driven by significant contributions from local talent and global companies such as Intel, AMD, and Qualcomm setting up global innovation centers here. However, the move towards semiconductor manufacturing is a significant leap forward; the country’s first commercial semiconductor fabrication plant is expected to open in 2026.
Listed below are areas where India plays – and hopes to play – a significant role in the semiconductor manufacturing industry.
Engineering services: Indian semiconductor engineering services, such as Infosys owned InSemi, play a crucial role in very-large-scale integration (VLSI) design, system design, embedded software, and software platforms. They have the capability to deliver ASIC design tape-outs for advanced technology nodes down to 5nm.
Also, Indian players like Infosys provide end-to-end engineering services including digital platforms, industrial digital thread (PLM, MES, CPQ), collaboration products (UC/CC), and private 5G networks – all of which are crucial for advancing manufacturing and innovation across industries including semiconductor.
Innovation ecosystem: India has a strong semiconductor engineering ecosystem with a network of engineering GICs/captives, established engineering services providers (ESPs), and emerging start-ups. These entities collectively drive innovation through extensive outsourcing, digital co-innovation partnerships, and integrated technological advancements.
Talent nurturing and expansion: India, home to around 120,000 chip design engineers – 20% of the global workforce – plans to expand its semiconductor talent pool to 1.2 million by 2032. The National Education Policy (NEP) and the SANKALP program are designed to enhance STEM education to support this growth. At the same time, India's Chips to Startup initiative aims to train 85,000 engineers in VLSI and embedded systems.
Among the prominent educational initiatives, NASSCOM in collaboration with Cranes Varsity, and with curriculum input from engineering service providers like Infosys, runs an embedded software boot-camp to align educational content with industry needs. Additionally, Infosys supports industry-academia partnerships through initiatives such as Infosys Springboard, and Engineering NEXT.
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Semiconductor manufacturing: The Indian government has begun the drive to support semiconductor manufacturing. Initiatives like the Production Linked Incentive (PLI) scheme for semiconductor manufacturing are attracting global investments and potentially fostering a robust local ecosystem. India’s first semiconductor chips will roll out of Micron's manufacturing unit in Gujarat. Now the Union Cabinet has also approved three new semiconductor units under India’s semiconductor development program in February.
Consumer base: India's semiconductor market is expanding quickly. Valued at $22 billion in 2019, it's anticipated to almost triple, reaching $64 billion by 2026, according to Counterpoint Technology Market Research. Rajeev Chandrasekhar, the country’s former Minister of State for IT and Electronics, forecasts even greater growth, projecting the market could reach $110 billion by 2030. Key drivers include automotive, telecom, computing, industrial automation, consumer electronics, and defense sectors.
Key takeaways
India's ambitious strides in the semiconductor industry, from attracting global giants to nurturing local talent to focusing on end-to-end capabilities, position the country as a potential chip powerhouse. These factors – combined with a predictable business environment – give India the opportunity to seize the momentum in what is now a global gold rush. As India continues to invest in R&D, establish state-of-the-art manufacturing facilities, and align its educational initiatives with industry needs, the future looks promising for India's role in the semiconductor market.
Article Courtesy: NASSCOM Community – an open knowledge sharing platform for the Indian technology industry: https://community.nasscom.in/communities/engineering-research-design/indias-path-semiconductor-leadership
Vikram Meghal is Senior Vice President and Global Head of Engineering for Networks, Communication, Media and Technology, Infosys. In this role, he is responsible for setting up the vision for the Engineering business including growth charters, key investment areas & strategic technology bets for the unit and owns the Global P&L for Engineering Services.
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