India’s Semiconductor Dream: A Reality in the Making?

Semiconductors, the unsung heroes of the digital age, silently power the devices essential to our modern lives, including smartphones, computers, medical equipment, and transportation systems. Without them, the world as everyone knows it would come to a halt.

All About India’s Semiconductor Dream

In 2021, the pandemic caused a semiconductor shortage due to manufacturing impacts in South Korea and Taiwan, affecting industries like automotive and gaming. India also faced issues, with Tata Motors announcing a semiconductor shortage that impacted car deliveries.

To address the shortage, the Indian government offered incentives for semiconductor companies under the ₹760 bn Product Linked Incentive (PLI) scheme. This led to various companies, including the Tata Group and Vedanta Group, expressing interest in setting up chip facilities in India.

In February 2022, Vedanta announced a joint venture with Foxconn to establish a semiconductor plant in Gujarat. However, the joint venture later fell through, but Vedanta continued its commitment to enter the semiconductor industry. Vedanta Group recently acquired semiconductor and display businesses from Twin Star Technologies, making it India’s first integrated semiconductor and display fab company.

Foxconn is also keen on India and reached out to Indian business houses for semiconductor manufacturing partnerships. The Tata Group plans to begin chip manufacturing through Tata Electronics. Additionally, US-based Micron Technology plans to build a $2.75 bn chip assembly and test facility in Gujarat.

India’s semiconductor dream is becoming a reality, fueled by global companies seeking alternatives to China and the Semicon India Programme. The government has shown commitment through initiatives like the National Policy on Electronics and the PLI scheme.

Challenges include a shortage of skilled workforce in semiconductor design and fabrication, inadequate research and development investments, and the need for massive investments in semiconductor fabrication facilities.

Investing in the semiconductor industry offers potential for robust growth driven by emerging technologies like 5G and AI. However, it can be volatile due to supply chain disruptions and geopolitical tensions. Diversification in investment is recommended.