What's Happening?
India is making a significant investment of $18 billion to establish itself as a major player in the global semiconductor industry. The country aims to create a comprehensive supply chain for chip production, from design to fabrication, testing, and packaging, on Indian soil. This initiative, known as the 'Semiconductor Mission,' seeks to reduce India's dependence on imports and secure chips for strategic sectors. Despite being one of the largest consumers of electronics, India currently has no local chip industry and plays a minimal role in the global supply chain. The government has approved 10 semiconductor projects, including two fabrication plants and multiple testing and packing factories. However, experts note that India needs a dynamic and deep ecosystem to realize its chip ambitions.
Why It's Important?
The investment in semiconductor manufacturing is crucial for India as it seeks to become self-reliant in chip production and capture a larger share of the global electronics market. This move comes amid a global race for semiconductor self-reliance, especially after the U.S. restricted exports of advanced AI chips to China. By developing its semiconductor industry, India could potentially reduce its reliance on imports and strengthen its strategic sectors. The initiative also aims to attract global semiconductor manufacturers to India, offering generous incentives. However, sustaining these investments and developing a robust ecosystem are critical challenges that India must address to succeed in this endeavor.
What's Next?
India's semiconductor ambitions face several challenges, including the need for a dynamic ecosystem and overcoming technical and infrastructural hurdles. The country must establish operational silicon fabrication facilities and ensure reliable road connectivity and specialty chemical suppliers. Additionally, India is focusing on outsourced semiconductor assembly and testing (OSAT) as a significant opportunity, which requires clarifying market access and demand channels for sustained growth. Success in these areas could see India enter the global chip industry, but the country is still far from locally developing and manufacturing cutting-edge 2nm semiconductors.
