With the advancement of artificial intelligence technology in various sectors, semiconductors hold the key to billions of products, extending from computers, laptops, mobile phones, smartphones, data centers, home appliances, tablets, smart devices, vehicles, life-saving pharmaceutical devices, ATMs, and many more. Our lives are very much dependent on semiconductors, either directly or indirectly. The demand for semiconductor chips is going to increase as the electronics manufacturing and designing industry grows.
The Indian government officially announced a $10 billion (INR 76,000 crore) package for the semiconductor design and manufacturing industry under the Atmanirbhar Bharat scheme in December 2021, to be spent over a six-year period. That was India’s dream for over a decade, and it is finally taking shape. In the next couple of months, we will see the first semiconductor manufacturing unit. We are aware that we need to accelerate our pace to match the global giants, but we know that our direction towards our goal is right and, within a short span of time, we will reach the top league.
With regard to the statistics, we have around 55,000 design semiconductor engineers who work in various companies around the country. C-DAC Pune has started a design-led scheme where engineers can use these common facilities to design their own semiconductors and explore options with their start-up ventures. This would be a stepping stone, and in the next five to six years, we could be the next big country to manufacture semiconductors.
According to the Government of India, this scheme will have a ripple effect across all the different sectors in the country. This industry is projected to contribute significantly to the USD 5 trillion dollar economy and USD 5 trillion GDP (Gross Domestic Product) by the year 2025. This is a huge step by our Prime Minister, Narendra Modi, in the field of electronics, which would in turn develop a whole ecosystem in our country that includes designing, fabricating, developing, and packaging. Today we stand at USD 75 billion in the electronic industry and the future is ours with an expected USD 300 billion in the coming 6 years.
The Government of India has assured that it will not only facilitate infrastructure support but also provide fast-track approvals for smooth functioning. In the next 4-6 months, we could see some big names emerging as leaders in this industry. The government plans to encourage companies like Intel and Samsung to invest and start operations in India. We have over 20,000 odd designers for the semiconductor industry, and that is a huge number for an effective design ecosystem. Also, we must mention that globally, 20% of the qualified, good-quality, technically sound people working in this semiconductor industry are Indians. Therefore, we are showing that with talented design engineers, we will be a sustainable long-term project that is profitable in all ways. Brain power, not dollar power, is ultimately capable of sustaining any industry!
The latest news is that Vedanta Ltd has selected Gujarat, Indian Prime minister Narendra Modi’s home state, for a $20 billion semiconductor project that is a joint venture with Taiwan’s Foxconn. The project will include display and semiconductor facilities near the city of Ahmedabad. Vedanta Ltd has requested 1000 acres of land free of cost on a 99-year lease, and power and water at concessionary and fixed prices for the next 20 years. The Government of India believes that India’s semiconductor market is projected to reach a new high of $63 billion by 2026, up from $15 billion in 2020.
But nowadays, the semiconductor design and manufacturing industry are facing a little bit of a blow as profit during the chip shortage falls every week. According to the global semiconductor Industry Association, the overall sales for July dropped by 2.3% to $49 billion in comparison with June. The three major reasons for this downfall could be the destruction from Ukraine’s war-related fallout; present-day China’s COVID-19 lockdowns; and inflation in the U.S. Meanwhile, South Korea’s Samsung, the world’s major manufacturer of memory chips indicates that the outlook for the second half of the year is somewhat gloomy and the semiconductor industry could be closed in an unsteady way in the year 2022.
Enriched with lessons from previous failures, the Government of India is now ready to accommodate and make necessary changes in all areas to attract global companies to set up manufacturing units in India. India is investing in a sector that is ripe for growth in the future. However, this scheme must solve the global chip shortage, and only then can India moves up the global supply chains.