Due to government measures to increase domestic manufacturing, technological improvements, and the growing demand for electronic products, the Indian semiconductor market is expected to grow significantly. The need for semiconductors has increased due to India’s growing consumer electronics, automotive, and industrial sectors, making the nation a vital link in the worldwide supply chain. To encourage domestic manufacturing and lessen reliance on imports, especially from East Asia, the government has implemented a number of initiatives, including the Semiconductor Mission and the National Policy on Electronics. Consequently, a number of international semiconductor firms are establishing research and production facilities in India, which is driving the market’s expansion.
In 2017, India’s semiconductor imports totalled US$ 4.65 billion, while its exports totalled US$ 0.21 billion. While imports decreased to US$ 3.15 billion by 2019, exports increased to US$ 0.33 billion. However, due to global economic disturbances like the COVID-19 pandemic, 2020 saw a decline in both imports and exports. Due to pent-up demand following the slump, 2021 saw an extraordinary comeback, with imports totalling US$5.36 billion. India made significant attempts to become a semiconductor hub in 2022, as seen by its exports, which hit a record high of US$0.52 billion.
The market is further bolstered by the growing demand for specialized chips and integrated circuits needed for technologies like 5G, artificial intelligence (AI), the Internet of Things (IoT), and electric vehicles (EVs). Notwithstanding these potential opportunities, obstacles still exist, including inadequate infrastructure, high upfront costs for manufacturing facilities, and reliance on international supply networks for raw materials. However, it is anticipated that the Indian semiconductor business will continue to develop, with local production, innovation, and greater investment all being crucial to its growth.
The Semicon India Programme was initiated by the government in December 2021 with an initial allocation of Rs. 76,000 crore (US$ 9.2 billion) aimed at fuelling the growth of semiconductor and display manufacturing ecosystems in the country.
India increased the funding for the Semicon India Program to Rs. 6,903 crore (US$ 833.7 million) in the interim Union Budget for 2024. A revised expenditure estimate of US $181.5 million (Rs. 1,503 crore) is suggested by the most recent financial information available for the Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India during FY24.
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Segmental Analysis
Integrated circuits (ICs) holds the highest market share: By Type
Among product kinds, integrated circuits (ICs) have the largest market share in the Indian semiconductor industry due to their vital significance in a variety of electronic applications. ICs are essential to the operation of computing devices, industrial automation, consumer electronics, automotive electronics, and telecommunications—all of which are rapidly expanding in India. Since ICs offer the processing power, memory, and functionality needed for these applications, demand for them is only expected to grow as India moves closer to implementing technologies like 5G, IoT, and artificial intelligence. Additionally, integrated circuits are very adaptable, encompassing a variety of types such as memory chips, microprocessors, and microcontrollers, each of which is designed to satisfy certain requirements in a variety of industries.
ICs are the most popular type in the Indian semiconductor industry due to their adaptability and crucial function in electronics; they routinely surpass other areas such as optoelectronics, discrete semiconductors, and sensors. Even though these other market categories are expanding as well, particularly in light of developments in fields like automation and automotive electronics, ICs are anticipated to hold onto their dominant market position because of their wide range of applications and the growing digitization of various industries.
Process Technology to hold the highest market share: By Technology
Out of all the technological segments, process technology has the largest market share in the Indian semiconductor industry. Process technology describes the particular tools and techniques needed to build the complex circuitry layers on semiconductor wafers, which affect the final chip’s performance, power efficiency, and transistor density. Process technology is essential to satisfying the needs of applications in the consumer electronics, automotive, telecommunications, and industrial sectors—all of which are expanding quickly in India—because it directly affects chip performance and efficiency.
The demand for increasingly sophisticated devices—such as those that integrate AI, 5G, and IoT—has increased the significance of process technology even more, as producers aim for increased efficiency and miniaturization to improve device capabilities. Therefore, improvements in process nodes—such as going from 14 nm to 7 nm or smaller—remain crucial in this market and attract a lot of attention and investment. Process technology continues to be the mainstay of semiconductor production, holding the largest market share because of its crucial role in determining chip performance and application suitability, even though packaging and fabrication technologies are also crucial because they allow for efficient thermal management and structural integrity for chips.
Competitive Analysis