India’s semiconductor industry is experiencing growth but is hindered by significant challenges, as outlined in a recent Jefferies report.
The key issues identified include an underdeveloped supply chain, a shortage of specialized manufacturing talent, and intense global competition. Despite these obstacles, India benefits from a strong engineering talent pool and government support aimed at fostering a competitive semiconductor ecosystem.
The scarcity of vital raw materials for chip production, including silicon wafers, high-purity gases, specialist chemicals, and ultra-pure water, is one of the main obstacles.
Despite having a strong chemical and gas manufacturing industry, especially in areas like Gujarat’s Dahej, India urgently needs to improve its capacity to produce materials of semiconductor quality. To lessen dependency on imports, the Indian government has made the creation of an extensive semiconductor supply chain a top priority.
India’s strengths in chip design are demonstrated by the fact that it currently employs close to 20% of the world’s semiconductor designers. Still, there is a large skills gap in the testing and production of semiconductors.
Companies are concentrating on skill development programs to solve this issue, and the government works with academic institutions to provide pertinent courses.
According to the research, China, Singapore, Malaysia, South Korea, and Taiwan are well-established semiconductor hubs that have spent decades building their ecosystems and pose a serious threat to India.
Many nations are providing subsidies and incentives to entice chip producers as the strategic significance of semiconductors increases on a global scale. India has responded by enacting significant incentives to entice capital to semiconductor manufacturing projects.
However, there are dangers associated with establishing sophisticated fabrication facilities, including difficulties with beginning production and problems with quality control. Securing long-term demand for chips in both domestic and foreign markets is critical to the success of India’s semiconductor sector.
Rapid technical improvements must also be kept up with; India needs to make large investments to stay competitive as multinational corporations continue to innovate in chip miniaturisation.
Despite these obstacles, with continued government assistance, industry partnerships, and R&D spending, India’s semiconductor sector has enormous growth potential. For India to become a key player in the global chip business, it will be essential to establish a comprehensive semiconductor ecosystem.
