Prime Minister Narendra Modi has laid the foundation stone for three new semiconductor plants, marking a significant milestone in India’s semiconductor industry. Two of these plants are located in Gujarat, and one in Assam, with a collective value of 1.25 lakh crore rupees. Led by the Tata Group, these projects signify a significant progress towards India’s ambition of becoming a global semiconductor manufacturing hub. Speaking at the ‘India Chips for Developed India’ program, Prime Minister Modi emphasized the transformative capacity of these initiatives.
Addressing the people, PM Modi said that the 21st century is a technology-driven century, and imagining it without electronic chips is impossible. Made in India and designed in India chips, will lead our country towards self-reliance and modernity. This strategic effort underscores India’s commitment to technical self-reliance and advancement, crucial for enhancing competition and innovation across various sectors. He said that commercial production will now begin soon.
What is Semiconductor Chip
Semiconductor chips, also known as integrated circuits (ICs), are a critical component in today’s digital world. These chips are used in a sea of applications across industries including electronics, appliances, automobiles, gaming, healthcare, transportation, power, clean energy, and defense systems. These chips also play a vital role in the development of artificial intelligence (AI). It is imperative to imagine a world without semiconductors, as it is impossible to imagine smartphones, laptops, TVs, video games, modern cars, advanced wireless networks, and the like without them.
Why is the Semiconductor Industry Important for India?
The semiconductor industry is crucial for India for several reasons:
- Economic Growth: It’s projected that India’s domestic semiconductor consumption will surpass $80 billion by 2026. This growth is driven by India’s large and expanding market, which offers a significant consumer base for semiconductor products.
- Self-Reliance: India aims to reduce its dependence on semiconductor imports and establish domestic manufacturing capabilities. This aligns with the government’s vision of AtmaNirbharta (self-reliance) and is supported by policies like the Production Linked Incentive (PLI) scheme.
- Global Positioning: India is striving to become a global leader in the semiconductor industry and secure a significant share of the global market. Investments in semiconductor fabrication plants and production facilities are part of this ambition.
- Job Creation: The focus on boosting semiconductor production is expected to create jobs and attract investments from top firms worldwide, fostering a vibrant semiconductor and display ecosystem.
- Technological Advancements: Semiconductors are essential for modern digital life and are key to the development of advanced technologies like electric vehicles and AI applications.
India’s push towards developing its semiconductor industry is evident from recent milestones, such as the announcement of the country’s first semiconductor fabrication plant and significant investments by major international and domestic players.
China’s dominance will end
China, Korea, and Taiwan dominate semiconductor chip manufacturing, with China particularly benefiting from this dominance. The global demand for chips is immense, and China serves as a significant market, even for countries like the United States. While China contributes a quarter of total semiconductor sales worldwide, American companies derive 60 to 70 percent of their revenue from China. India has now emerged as a contender to challenge China’s monopoly. With the assistance of several American companies, India has formulated a strategic plan for semiconductor development. Upon its implementation, India is poised to become a major player in global semiconductor production within the next five years. This development will significantly diminish the monopoly currently held by countries like China, Korea, and Taiwan.
Semiconductor Industry in Figures
The semiconductor market is projected to experience significant growth during the forecast period. It is estimated to increase from $573.44 billion in 2022 to $1,380.79 billion by 2029, with a compound annual growth rate (CAGR) of 12.2%. In 2024, global sales are expected to reach $588 billion, marking a 13% improvement from 2023. This surpasses the industry’s previous record revenue of $574 billion in 2022 by 2.5%.
Road Ahead for India After Commercial Production Starts
The Tata Group aims to commence commercial production from India’s inaugural semiconductor manufacturing unit by 2026. Acknowledging the nation’s prolonged anticipation to achieve self-sufficiency in chips, spanning from smartphones to defense systems, this ambitious timeline underscores a proactive stance. The plant is scheduled to initiate production either by the conclusion of 2025 or the onset of 2026, servicing diverse sectors including automotive, electricity, electronics, and consumer goods.
