Nurturing Innovation: Developing A Thriving Semiconductor Ecosystem

Semiconductor chips, which are the backbone of modern electronics, have become a prerequisite for growth of any economy, drawing significant attention from the key stakeholders.

Thanks to the combined efforts of the government and industry, India is fast emerging as a hub for semiconductor chip manufacturing and design. The Indian semiconductor market is growing rapidly, and according to Deloitte, the sector is expected to touch a whopping $55 billion by 2026.

Many futuristic measures are propelling the growth of the industry in the post-pandemic world. During the pandemic, India realised the vulnerabilities in the semiconductor imports that badly affected many industries. In response, a futuristic initiative, the India Semiconductor Mission was launched in 2021 with an outlay of Rs. 76,000 crore. This has accelerated India’s actions towards the aspirational goal of becoming ‘Atmanirbhar’ in terms of chip production.

Strategic alliances form another cornerstone, as India collaborates with industry behemoths like the US Semiconductor Industry Association, synergising efforts and knowledge to bolster the nation's semiconductor ecosystem.

However, numbers suggest that India needs to ramp up actions towards semiconductor production. According to the Minister of State, Electronics, the import value of semiconductor chips in India increased from Rs. 67,497 crore in 2020-21 to Rs. 1,29,703 crore in 2022-23. This highlights not only the burgeoning demand for chips, but also the growing load on the exchequer. 

Swiftly Evolving Landscape

The semiconductor landscape is consistently evolving in India, thanks to the investments in R&D to pioneer smaller process nodes, ranging from 45nm to 110nm. This aims to enhance performance and energy efficiency across diverse sectors like smartphones, consumer electronics and automotive applications.

Furthermore, the approval of three new semiconductor fabs, coupled with investments in assembly, testing and packaging facilities totalling $11 billion, underscores India's commitment to bolstering its semiconductor manufacturing prowess.

The enthusiastic participation of startups in this sector also promises a bright future. They are seizing opportunities in the burgeoning domains of artificial intelligence/machine learning and internet of things. They are crafting cutting-edge chip solutions tailored for AI/ML hardware, edge AI platforms and energy-efficient chips to power the next wave of IoT devices.

Incentives tailored for semiconductor design startups are nurturing a vibrant entrepreneurial ecosystem. Moreover, advanced packaging, testing and AI-related chip components are emerging as pivotal segments. International collaborations with tech powerhouses like Japan and the US are fostering technology transfer and enhancing supply chain resilience.

Most importantly, in this progress, India is consistently emphasising sustainability, with policies integrating renewable energy, waste management and green technologies. Industry is aligning its operations with environment-friendly practices.

Capitalising On Strengths

India's semiconductor industry is propelled by a unique amalgamation of strengths, fostering an environment ripe for growth and innovation. One of its key pillars is the vast talent pool it harbours.

Renowned for its robust design and engineering expertise, India magnetises global semiconductor giants, who establish their R&D hubs within its borders, capitalising on the nation's wealth of skilled professionals. Moreover, the government is focusing on skill development to ensure talented professionals for the sector.

Further, fortifying this foundation is the unwavering support from governmental policies. Backed by strategic initiatives, India offers financial incentives, infrastructure reinforcement, and a clear roadmap for semiconductor advancement, encouraging both local entrepreneurship and foreign investment.

Moreover, the emergence of cluster-based ecosystems acts as catalysts, fostering collaboration, optimising efficiency and nurturing a fertile ground for talent acquisition and retention. These clusters serve as vibrant hubs where ideas converge, innovation thrives and the future of India's semiconductor industry is sculpted.

Challenges Ahead

The Indian semiconductor industry has showcased remarkable prowess in chip design; however, it is encountering hurdles. The sector is facing challenges in building chip fabrication facilities which impede progress towards self-reliance.

Moreover, semiconductor chip production is a capital-intensive activity and requires huge investment. This very requirement discourages smaller entities from venturing into the sector. However, for large-scale production and to meet the consistently rising demand, India needs to encourage these smaller players as well. Most critically, the lengthy gestation period increases the risk for investors and makes them rethink their decisions.

Furthermore, resource constraints add to the challenges. The industry requires ultra-pure water, stable power supply, and specialised gases and wafers in the production process, but India faces difficulties in their proper and adequate supply. The sector must find apt solutions for these challenges to accelerate progress and realise the dreams of India and its thriving electronics manufacturing segment.

Conclusion

India's semiconductor sector is amid a transformative journey fuelled by initiatives such as Make in India, bolstered by skill development programmes and incentives for manufacturing and R&D. Long-term success pivots on collaborative endeavours among government, academia and industry to surmount talent shortages.

Competitive compensation, robust skill enhancement initiatives, and a conducive environment are imperative for India to emerge as a semiconductor talent powerhouse amid the global workforce scarcity, ensuring its sustained prominence in the evolving tech landscape. This National Technology Day is the perfect occasion to discuss the challenges and opportunities in the sector and accelerate actions towards self-reliance.