With the increasing use of electronic devices across all industrial sectors, the demand for semiconductors has risen in tandem. According to market experts, from 2022 to 2029, this industry is expected to expand at a CAGR of 12.2%. The value of this sector in the forecast period can grow from USD 573.44 billion to USD 1,380.79 billion.

Some of the factors that can be attributed to this market’s growth are the increasing use of Machine Learning (ML), Artificial Intelligence (AI), and the Internet of Things (IoT) in several industries. Additionally, the increasing use of advanced and faster memory chips is another reason for the growth of the semiconductor industry.

However, after the global pandemic in 2020, there have been several hurdles in this industry’s growth. China, which was earlier the biggest manufacturer in this market, had to step down from its top position due to trade limitations and workplace restrictions. Also, its trade war with the USA made it difficult for them to establish business relations with any companies that had ties with the latter.

Furthermore, severe draughts in Taiwan in 2021 and the Russian invasion of Ukraine in 2022 further enhanced global semiconductor supply shortages. Quite understandably, microchip companies around the world are looking to enter new markets in order to bridge this gap between demand and supply. But, as easy as may it sound, establishing a manufacturing plant in a new geographical has its own set of challenges. Fortunately, the presence of semiconductor strategic consulting firms is there to ease the process.

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Why India can be the next Global Semiconductor Exporter?

Here are some of the major factors that can make India the next global semiconductor hub:

• India’s Booming Electronics Sector

By the financial year 2025-26, India’s electronics sector is predicted to reach USD 300 billion. Thus, there is going to be a significant rise in demand for electronic products in the future. As a result, the need for semiconductors is going to increase simultaneously.

This presents a golden opportunity for global semiconductor companies that wish to establish manufacturing plants in this country and take advantage of the rising domestic as well as global demand.

• USD 10 billion (approx.) PLI Scheme by the Government

Another major reason for foreign businesses choosing India to manufacture semiconductors is the approx. USD 100 billion production-linked incentive (PLI) scheme launched by the Government of India. Moreover, the Government has also declared the initiation of an independent India Semiconductor Mission (ISM) to develop a green semiconductor ecosystem within the nation.

This type of financial support by the government will encourage foreign businesses to invest in the Indian semiconductor market and take it a step ahead to be a global hub.

• Global Semiconductor Shortage

Currently, due to several micro and macroeconomic factors, there is a huge shortage of semiconductors on a global scale. This presents an opportunity for new manufacturers to take advantage of this situation and occupy a sizeable share of the international market.

In this regard, two of the Indian conglomerates are making investments in the semiconductor manufacturing segment. Additionally, five more organizations have proposed investments worth USD 20.5 billion for the purpose of establishing display and semiconductor fabrication units.

Foreign companies willing to join this ride can consider investing or partnering up with such firms.

• Plans on Occupying the ATMP and Design Segment

When it comes to manufacturing semiconductors, there are several stages. One of them is Assembly, Testing, Marking, and Packing or ATMP. Indian authorities are currently planning to occupy a big share of this particular sector. This is because they believe almost 10% of the semiconductor business’ revenue lies in this segment.

Moreover, the government is also planning to establish 20 companies that will be involved in designing semiconductors. This way, they can capture an additional 30% revenue of this market. A significant factor that can fuel all these developments is the wide availability of inexpensive technical labor.  

To reap the benefits of this sunrise sector, foreign businesses can consider collaborating with these companies. However, when it comes to making such agreements, there can be several legal compliances that need to be taken into consideration. Under such circumstances, hiring a semiconductor consulting firm can be a smart move.

What can Semiconductor Manufacturers Expect in the Upcoming Years?

As per the Industry reports, the global semiconductor industry is predicted to reach USD 1 trillion by 2030. During the forecast period, experts estimate this industry segment to maintain a CAGR of 6 to 8%.

There are a few major reasons behind this expected growth. Firstly, to curb the influence of climate change, electric vehicles have been increasingly adopted worldwide. Moreover, the rising popularity of remote work culture and the growing influence of AI across multiple industrial sectors such as Home Automation and Industrial Automation has increased the demand for micro-processing chips.

There are several organizations like Tecnova that can facilitate market entry and expansion in the Indian semiconductor sector. Moreover, they offer services like site selection, partner search, mergers and acquisitions, India sourcing, vendor development, and more, in order to facilitate a streamlined experience for foreign firms.

Reference

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https://bit.ly/3LOzZBX

Global Semiconductor Shortage and India’s Role in Fulfilling the Demand

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