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Arun Singh
On September 11th, Prime Minister Narendra Modi inaugurated Semicon India 2024, a three-day event, and conveyed a compelling message to the global semiconductor industry. He emphasized that the current climate in India is highly advantageous for investment, citing the government’s stable policies and improved business environment. PM Modi highlighted three pivotal factors driving the semiconductor sector’s growth: the reform-oriented nature of the government, the expanding manufacturing base, and India’s burgeoning aspirational market.
To position itself as a global leader in the Fourth Industrial Revolution and achieve its $5 trillion economy target, India must cultivate a robust semiconductor industry. Semiconductors are foundational to modern technology, fueling innovations in smartphones, computers, and advanced manufacturing systems. A strong domestic semiconductor sector is crucial for supporting technological advancements, economic growth, and strategic autonomy. It would mitigate reliance on imports, enhance economic stability, and generate high-paying jobs. Additionally, semiconductors are essential for national security, underpinning defense and infrastructure systems and bolstering self-reliance. By advancing this industry, India will enhance its competitiveness in electronics, automotive, and telecommunications, attracting significant global investment. Ultimately, semiconductors are central to driving digital transformation and smart manufacturing, both pivotal to succeeding in the Fourth Industrial Revolution.
Semiconductor Industry: Powerhouse to the economic landscapes of the US, China, and Japan:
In the United States, the semiconductor sector generated around $287 billion in revenue in 2022, accounting for nearly 50% of the global market. It also supports over 250,000 direct jobs and 1 million additional jobs across the supply chain, driving economic growth and innovation. The industry plays a crucial role in national security, with its advanced technologies being vital for defense systems and strategic applications. Furthermore, for every dollar spent in the semiconductor sector, approximately $3.50 is generated in the broader economy, demonstrating its multiplier effect across various industries like automotive and consumer electronics.
China’s semiconductor industry has grown rapidly, fueled by over $150 billion in investments in the past decade aimed at achieving self-sufficiency. In 2023, the industry was valued at around $200 billion, with China striving to meet 70% of its semiconductor demand domestically by 2025. Investments in research and development have propelled growth in key sectors like 5G and AI, helping China move toward its goal of becoming a high-tech leader by 2035.
Japan’s semiconductor market, valued at $48 billion in 2023, remains a significant player in global production and technological innovation, with companies like Sony and Toshiba leading the way. Japan exported $30 billion worth of semiconductor products in 2022, strengthening its trade balance. With more than $10 billion invested annually in semiconductor research and development, Japan continues to drive advancements in consumer electronics, robotics, and automation. Strategic international partnerships further enhance Japan’s role in the global semiconductor supply chain.
India’s Expanding Semiconductor Landscape:
India has embarked on an ambitious journey to establish itself as a global semiconductor manufacturing hub. With the Modi government’s strategic initiatives and the support of private-sector investments, the country is rapidly transforming its semiconductor landscape. Recent developments, including the approval of major semiconductor projects and the establishment of advanced facilities across India, signal the country’s commitment to becoming a key player in the global semiconductor industry. The India Semiconductor Mission (ISM) has been pivotal in reshaping this landscape, creating opportunities for economic growth, innovation, and technological self-reliance.
The India Semiconductor Mission is the vision of the Prime Minister Modi to make India a leader in the electronics manufacturing, semiconductor design, precision manufacturing & innovation. This vision of AtmaNirbharta in electronics & semiconductors was given further momentum by the Hon’ble Prime Minister Modi. The ISM, launched with the goal of building a robust semiconductor ecosystem, is now at the forefront of India’s efforts to position itself as a global semiconductor powerhouse. India Semiconductor Mission (ISM) has-approved five semiconductor units who will all receive central and state government subsidies under the programme for development of semiconductors and display manufacturing ecosystem in India with a total outlay of INR 76,000 crore.
Key Semiconductor Facilities Emerging Across India:
India’s expanding semiconductor landscape is being shaped by several critical facilities under construction across the country. These state-of-the-art projects not only symbolize India’s growing technological prowess but also contribute to the country’s ambition of achieving self-reliance in semiconductor manufacturing.
- Micron’s OSAT Facility, Sanand, Gurjat: One of the key players in India’s semiconductor expansion is Micron Technology, an American chipmaker. The company is building an Outsourced Semiconductor Assembly and Testing (OSAT) facility in Sanand, Gujarat, with a total investment of $2.75 billion. The project, approved in June 2023, is co-funded by the central and Gujarat governments, which are contributing 50% and 20% of the investment, respectively. This facility will focus on assembling and testing DRAM and NAND products, catering to both domestic and international markets. Expected to produce the first made-in-India chips by mid-2025, Micron’s plant will play a crucial role in India’s efforts to integrate more deeply into the global semiconductor supply chain.
- India’s First Chip Fabrication Plant, Dholera, Gujrat: Another monumental step in India’s semiconductor journey is the construction of the country’s first chip fabrication plant in Dholera, Gujarat. This mega-fab is a joint venture between Tata Electronics and Powerchip Semiconductor Manufacturing Corporation (PSMC), one of Taiwan’s leading chipmakers. With a massive investment of INR 91,000 crore, this facility aims to produce 50,000 wafers per month. Laid by Prime Minister Narendra Modi in March 2024, the Dholera plant will focus on sectors such as automotive, computing, communications, and AI, with the first batch of semiconductors expected by December 2026. This facility represents India’s push to strengthen its semiconductor manufacturing capabilities and reduce dependence on imports.
- India’s First Indigenous Semiconductor Assembly and Testing Facility, Morigaon Assam: In an effort to decentralize the semiconductor industry and bring development to new regions, Tata Electronics is setting up India’s first greenfield semiconductor assembly and testing facility in Morigaon, Assam. With an investment of INR 27,000 crore, this facility will create over 27,000 jobs and serve as a critical hub for semiconductor assembly, testing, and packaging. The plant will focus on wire bond, flip chip, and integrated systems packaging (ISP) technologies, with a capacity to produce 48 million chips daily. Operations are expected to commence by mid-2025, making this facility a cornerstone of India’s semiconductor ambitions in the northeastern region.
- C G Power’s OSAT Facility, Sanand, Gujarat: The Murugappa Group’s C G Power, in partnership with Renesas Electronics Corporation from Japan and Stars Microelectronics from Thailand, is developing an advanced OSAT facility in Sanand, Gujarat. With a planned investment of INR 7,600 crore over five years, this facility will cater to industries such as automotive, consumer electronics, and 5G technology. This facility will produce a range of semiconductor products and is expected to create 5,000 jobs. Over the next three years, the plant aims to scale up production to 1.5 crore units daily, further bolstering India’s semiconductor manufacturing capacity.
- Kaynes Semicon Plant, Gujarat: In a significant move to expand India’s semiconductor production capabilities, the Union Cabinet approved Kaynes Semicon’s proposal to set up an OSAT unit in Sanand, Gujarat. With an investment of INR 3,307 crore, this facility is set to produce 6.3 million chips daily. The government is offering 50% capital investment support under the ISM’s modified scheme, reinforcing India’s efforts to offer a competitive alternative to China in the global semiconductor landscape.
Inclusion of Youth, Academia and Industry:
Under Modi Govt’s National Semiconductor Mission, Currently, 113 universities, academic institutions, and research organizations across India have incorporated semiconductor-focused courses, tailored in collaboration with industry leaders. These programs aim to align academic knowledge with real-world industry needs, ensuring that graduates are ready to contribute to the semiconductor landscape.
For instance, the LAM Research’s Semiverse program, running in 74 universities, has trained over 2,600 students this year alone. This initiative is expected to expand massively in the coming years. In another key development, AMD’s Global Design Center in Bengaluru has opened, currently employing 5,000 engineers, with further expansions planned. These academic and industry linkages are setting the stage for India to become a major player in global semiconductor design and manufacturing.
India’s existing strength in semiconductor design is another critical pillar of the Semiconductor Mission. The country already boasts over 300,000 engineers working in chip design across various companies, with 52,000 of them engaged in leading-edge, complex chip designs. This design capability has drawn international interest, and the government’s support for the sector is evident. Thirteen design ecosystem partners have received financial assistance through the program, with several attracting venture capital interest, signaling strong growth potential in this area.
Recognizing the strategic importance of semiconductors, the Modi government has decided to enhance its chip manufacturing incentive policy, increasing the funding outlay for the second phase of the ISM to $15 billion, up from $10 billion in the first phase. This expanded financial support is crucial for ensuring the successful establishment of these critical facilities and accelerating India’s emergence as a global semiconductor hub.
Reshaping the Nation’s Influence on the Global Stage:
India’s burgeoning semiconductor boom is set to redefine its geopolitical standing by enhancing strategic autonomy through reduced dependence on foreign imports and positioning the nation as a key player in the global semiconductor landscape. By fostering collaborations with major global powers like the US and Japan, India strengthens its national security, ensuring access to critical technologies for defense and infrastructure. This expansion allows India to emerge as a global supply chain alternative, diminishing China’s dominance in the semiconductor space. With increased investments and advanced manufacturing capabilities, India is attracting strategic investments, further bolstering its geopolitical influence. This growth enables the nation to participate more assertively in global forums such as the WTO and G20, leveraging its technological prowess. As part of the broader Indo-Pacific strategy, India’s semiconductor sector fosters closer ties with allied nations, promoting economic diplomacy. Through semiconductor diplomacy, India is poised to shape trade agreements and partnerships favorable to its long-term strategic goals.
To sum up, Modi’s National Semiconductor Mission stands as a pivotal initiative in India’s technological and geopolitical landscape. By spearheading this mission, the Indian government is not only addressing the critical need for domestic semiconductor manufacturing but also reinforcing the country’s strategic autonomy and global influence. The mission’s emphasis on building a comprehensive semiconductor ecosystem—including fabrication plants, assembly units, and research facilities—positions India as a key player in the global supply chain, enhancing national security and economic stability. It fosters strategic partnerships with major economies, strengthens India’s role in international forums, and counters the dominance of competitors like China. Ultimately, Modi’s National Semiconductor Mission is instrumental in transforming India into a global semiconductor hub, driving technological innovation, and securing its position as a formidable force in the global economy.
(The Writer is MP, Rajya Sabha & National General Secretary of BJP)