India’s Big Step in Chipmaking

Last Updated on Sep 14, 2022 by

With the Make in India, Digital India, and Start-up India programmes, India has witnessed a substantial spike in demand for electronic products in the last few years. The country’s position as the second-largest mobile phone manufacturer in the world, and the surge in internet penetration among the population are creating a huge demand.

India’s first big step: On Tuesday, a Vedanta-Foxconn JV signed an MoU with the Gujarat govt to set up a semiconductor and display unit in the state. The JV plans to invest Rs. 1.54 lakh cr.

Zoom out: Globally, the demand for semiconductors has reached a new high after supply chains were broken due to the pandemic, followed by geopolitical tensions. As a result, the production of various items, from cars to consumer durables, got disrupted worldwide.

Scramble to be self-reliant: The world now wants to diversify the source of chipsets. India, in particular, does not want to rely on just a few American, Japanese, South Korean, or Taiwanese semiconductor manufacturers.

India’s semiconductor needs are context: India is one of the largest consumers of electronic products in the Asia-Pacific region.

It is the third largest start-up hub.
India is projected to emerge as the fifth-largest consumer of electronic products by 2025
Electronics repair, in addition to manufacturing, has the potential to create one crore jobs

Existing chipmakers in India: Saankhya Labs, ASM Technologies, Broadcom, Chiplogic Technologies, CDIL, MosChip Semiconductor Technologies, Einfochips Semiconductor, Tata Elxsi, Semiconductor Lab, and NXP Semiconductors and more. However, their output is not enough to match the demand.

The Indian market is witnessing increasing investment from players such as Intel, C4V (a lithium-ion cell manufacturer in the US), etc.

Driving growth: The government’s National Policy on Electronics aims to facilitate a turnover of $400 bn in domestic manufacturing by 2025

Under the PLI scheme for IT hardware, the approved enterprises are estimated to manufacture equipment worth $21.62 bn over the next four years.
The electronics sector is expected to nearly double in contribution to the GDP in the next few years, owing to increased support from the government for domestic manufacturing.

Global competitive landscape: TSMC is the largest semiconductor manufacturer in Taiwan and the world and has an annual revenue of $65.96 bn.

ASE Technology ranks second in Taiwan with a revenue of $22.36 bn. This is followed by AU Optronics which has a revenue of $10.5 bn.
Then there is MediaTek with a revenue of $19.16 bn and Lite-On Technology with a revenue of $7.5 bn.

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