Silicon dreams: a SWOT analysis of India’s burgeoning semiconductor industry

The semiconductor frenzy is a worldwide phenomenon, but India’s situation is distinctive.

SOURCE: Digitimes

On the one hand, large design companies like AMD and Marvell are making a strong presence here with scores of engineers working on global projects. On the other, the manufacturing sector just received approval to set up some significant plants.

Amongst all of that, the government is trying to dole out incentives and subsidies, making major predictions, and promising a strong semiconductor ecosystem in the country by 2030.

India is difficult to understand from the outside. It’s too big and diverse for any data to be comprehensive.

Bringing it together to build any ecosystem is a herculean task, and semiconductors are probably the toughest. To shed light on this intricate scenario, we’ve explored a SWOT analysis of India’s semiconductor industry, drawing insights from industry leaders and expert analysts.

Strengths to leverage

Anurag Awasthi, VP for policy, government, international cooperation, and corporate affairs at IESA, highlighted that India’s top three strengths in the semiconductor industry can be aptly summarized by three D’s – Demand, Demographic Dividend, and Design prowess. He emphasized that these three aspects are currently driving and will continue to attract domestic and international investments.

The key to this could be the design prowess, followed by the current manufacturing initiatives, according to Sanjeev Keskar, CEO of Arvind Consultancy.

“In terms of strengths, we have chip design centers and verification resources in India by almost 28 out of the top 30 semiconductor companies in the world,” Keskar added. We have a large workforce working in chip development, SOC, and ASIC development. “Our design services companies also have large teams for chip design and semiconductor IP products. Many have offshore development centers in their campuses, and they are doing great work.”

On the manufacturing side, three key projects are in the pipeline, including a wafer fab proposal by Tata in Gujarat. Besides these, several OSAT/ATMP projects are lined up for approval from the government, indicating strong interest in the industry.

Madhavi Rao, field marketing group director for EMEAI at Cadence Design stressed the role of a skilled and experienced talent pool in India.

“In addition, favorable government policies like the Design Linked Incentive (DLI) and Product Linked Incentive schemes, and the tremendous investments that the government is making to develop the ecosystem put us in a favorable position on the global stage,” Rao said. “Initiatives like the India Semiconductor Mission aim to strengthen the design and innovation ecosystem, which is crucial for developing more Intellectual Property (IP) and design startups in India. There has never been a better time for companies and entrepreneurs to seize the opportunities that India offers.”

Weaknesses that challenge

One of the major concerns is that while India excels in IP creation and innovation, most work is done for global companies, according to Keskar. On the manufacturing side, there are a host of other challenges.

“There’s no strong local fabless ecosystem,” Keskar said. “In manufacturing, we lack skilled manpower to run fabs and ATMP units as we never had this industry. Infrastructure challenges include the need for clean water and uninterrupted clean energy. While we have many engineering colleges, there needs to be a special focus on semiconductor education to ensure a skilled workforce for future growth.”

To Awasthi, the pressing challenges include a lower scale and a lack of specialty skilling for semiconductor manufacturing.

“These challenges are now being addressed by astute policy interventions by the government, dynamic revision of syllabi, greater proliferation of VLSI courses, and a lot more,” Awasthi added. “It has to be clearly factored that India is on the path to be the skilling powerhouse of the future.”

Opportunities to grow

Keskar pointed out that India’s electronics market is growing rapidly. Last year, it was valued at $120 billion and is expected to grow to $300 billion by 2026-27. Semiconductor consumption in India is projected to reach almost $75 billion by 2027 and exceed $100 billion by 2030.

“The global semiconductor market, which was around $570 billion last year, is expected to grow to $1 trillion by 2030,” Keskar said. “India could capture a significant portion of this market. We need to encourage SOC development and create a fabless ecosystem. Additionally, manufacturing opportunities exist in creating components within India, which can reduce dependence on imports and improve competitiveness.”

Awasthi added that The Product Linked Incentive (PLI) scheme is the best in class all over the world with a 50 percent Pari-passu along with the respective state government subsidies, which vary from state to state.

“While the initial figure of $10 billion may not appear too big as the budgetary outlay, there is more in the offing, depending on fruition and sanctioning of proposals,” Awasthi said. “The impact of the same will be profound in the times to come in terms of scales of production, embracing of myriad technologies as well as building world-class facilities.”

IESA has an ongoing program called ‘Semiconductor Nation Campus Connect’, which is aimed to spread awareness, provide industry interactions, and collaborate with select academia for expert talks, speaking sessions, mentoring, and advice.

More specifically, Rao identified two key opportunities – 3D-IC technology and a market for homegrown design companies. While 3D-IC technology has been under development for several years, it is now gaining significant momentum as a prominent trend.

“India’s consumer electronics market is growing exponentially, thanks to factors such as urbanization, increasing disposable income, and government initiatives such as Digital India and Make in India,” Rao said. “This growth has led to a significant increase in demand for semiconductor chips.”

Threats that can hinder

Keskar stated that the main threat is global competition. Countries in the EU, the US, Israel, China, South Korea, Taiwan, and Japan are focusing on semiconductors. He emphasized the need to attract the right technology partners and customers to differentiate India.

Others added that while delays in getting approvals for proposals can be a concern, with solid proposals and the right partners, approvals can be expedited.

Moving forward

To strengthen India’s semiconductor sector, the initial focus should be on analog, power, and discrete semiconductors rather than digital CMOS technology, which is currently at 10 nanometers and below.

Keskar said that targeting 45-nanometer or 28-nanometer technologies and stable discrete, power, and analog technologies will ensure long-term engagement. Additionally, inviting global Indian talent back to India with attractive offers can significantly boost the semiconductor ecosystem.

“Another point to note is that refining the DLI scheme is crucial,” Keskar added. “This involves defining priority chips for India and supporting proposals based on company capabilities with tailored incentives, moving beyond the restrictive $4 million cap.”

Finally, replicating successful models like the Semiconductor Fabless Accelerator Lab (SFAL) in Bangalore in at least ten cities across India where there is available talent will also be beneficial. This expansion will harness local talent and create a robust semiconductor ecosystem nationwide.