According to the ‘India Semiconductor Market Report, 2019-2026’, a joint research by the India Electronics and Semiconductor Association (IESA) and Counterpoint Research, India’s semiconductor component market will see its cumulative revenues climb to $300 billion during 2021-2026.
Commenting on the report, Krishna Moorthy, CEO and president, IESA, said, “Before the end of this decade, there will be nothing that will not be touched by electronics and the ubiquitous ‘chip’. Be it fighting carbon emissions, renewable energy, food safety, or healthcare, the semiconductor chip will be all-pervasive. Imagine this – all children all over India get educated in virtual classrooms by the country’s best teachers. The chip makes it possible. Again, imagine everyone in the country gets quality healthcare and diagnostics done remotely. Medicines are delivered by drones at your doorstep, even in the farthest villages of India. The chip will make it possible, and we will see this in front of our eyes very soon. Let us make India the semiconductor nation.”
The report further notes that India is poised to be the second largest market in the world from the perspective of scale and growing demand for semiconductor components across several industries and applications. As per report, this demand is being pushed by the increasing pace of digital transformation among the country’s consumers, enterprises and public sector through the adoption of new technologies, from advanced connectivity to content consumption to the cloud. These cover smartphones, personal computers (PCs), wearables, cloud data centres, Industry 4.0 applications, internet of things (IoT), smart mobility, and advanced telecom and public utility infrastructure.
Meanwhile, Neil Shah, vice president, Counterpoint Research, said, “The next big boom for semiconductor components will come from across sectors. However, the telecom sector with the advent of 5G and fibre network rollout will be a key catalyst in boosting the semiconductor components consumption. This consumption will not only come from the advanced semiconductor-heavy 5G and fibre-to-the-home (FTTH) network infrastructure equipment, which will contribute to more than 14 per cent of the total semiconductor consumption in 2026, but also from the highly capable AI-driven 5G endpoints, from smartphones, tablets, PCs, connected cars, industrial robotics to private networks. Also, ongoing efforts to embrace cleaner and greener vehicles (electric vehicles) will provide an impetus for the automobile industry to adopt advanced technologies, which in turn will boost the demand for semiconductor components in India. Consumer electronics, industrial, and mobile and wearables will be the other key industries for the growth of the semiconductor market in India. Further, this semiconductor demand will not only be driven by domestic consumption but also by the growing share of exports.”
The study notes that in 2021, India’s end equipment market stood at $119 billion in terms of revenue. It is expected to grow at a compound annual growth rate (CAGR) of 19 per cent from 2021 to 2026. The study affirms that the electronic system design and manufacturing (ESDM) sector in India will play a major role in the country’s overall growth, from sourcing components to design manufacturing. The semiconductor industry in India is on a path to immense growth over the next few years to help India’s economy reach the next stage for both domestic consumption and exports. While the country is becoming one of the largest consumers of electronic and semiconductor components, most components are imported, offering limited economic opportunities for the country. Currently, only 9 per cent of this semiconductor requirement is met locally, the report added.
Further, as per the report, the demand for semiconductors is growing astronomically worldwide. However, multiple factors, including the pandemic and global geopolitical events, have heavily impacted the manufacturing of the components. This research is aimed at analysing the market situation, manufacturing supply chain, and prospects for India as a premier manufacturing destination not only for finished goods but also for semiconductor components. While the local production is currently low, India has immense potential to become a leading semiconductor component supplier in the coming years, provided the talent pool and resources are utilized correctly. The government’s initiatives, from ‘Make in India’ to Production Linked Incentive (PLI), will help accelerate this journey but will need some additional reforms to increase local manufacturing and sourcing of semiconductor components. If this is done, the semiconductor market can be a major contributor to economic growth, and India’s push to become a $5-trillion economy.
Additionally, Sunil G Acharya, vice President, IESA, said, “Semiconductors will be inside everything intelligent. India is becoming a tech-centered growth story with advancing technologies and innovation being integral to democratising access. The semiconductor study will play a major role in India’s growth. A large young population combined with an increased focus on digitalisation, advancing skill levels, growing manufacturing and foreign investment traction will take India’s semiconductor industry to the next level in the coming years.”
With regard to the current stage of local manufacturing, Shivani Parashar, research analyst, Counterpoint Research, said, “To achieve India’s semiconductor vision, a robust and indigenous technology ecosystem will be required to build on the existing policy foundation through PLI-like schemes. Renewed focus is needed for incentivizing the country’s design ecosystem in a manner that helps create a stronger foundation for design-led manufacturing and allied sectors, be it for local consumption or exports. This strategy will transform the landscape in the coming years to drive local sourcing trends. The share of local sourcing is expected to grow to over 17 per cent by 2026. This translates into a six-fold rise in potential locally-sourced semiconductor revenues.”
