From Chips to Opportunities: How Semiconductors are Shaping India's Growth
India's Semiconductor Surge: A Blueprint for Dominance
Semiconductor market poised for trillion-dollar surge by 2030
A major chunk of this growth will come from markets such as US, India, and China
A New Dawn for Indian Semiconductors: Industry Leaders Weigh In
From Silicon Desert to Silicon Valley: India's Semiconductor Evolution
1980s
* Government initiates semiconductor policy
* Inauguration of India's first semiconductor fabrication plant (fab) by SCL in Mohali, Punjab.
1990's
* Formation of semiconductor associations and societies
Early 2000's
* Increase in semiconductor design services companies
Mid-2000
* Entry of multinational companies into Indian market
* India's first semiconductor policy
Late 2000's
* Growth of electronics manufacturing clusters
2020's
* India's emergence as a key player in the global semiconductor industry
* India Semiconductor Mission (ISM) events promoting domestic ecosystem.
* Micron Technology to set up testing and packaging plant (ATMP) in Sanand, Gujarat.
* Tata Group, in collaboration with PSMC, to establish fab in Gujarat
* CG Power and Renesas to establish semiconductor plantin Gujarat's Sanand
* Tata to set up chip assembly and testing unit in Assam
The Rise of India's Silicon Valley: A Startup Perspective
India's Semiconductor Industry Leaders
The current semiconductor ecosystem in India is largely dominated by global MNCs and Indian corporates
Fueling India's Chip Revolution: Key Enablers
India's Semiconductor Boom: A Win for Startups
THE OPPORTUNITY
CHALLENGES
KEY FOCUS AREAS
GOVERNMENT INITIATIVES & POLICIES
India's semiconductor startups largely overlook IP development.
Bengaluru dominates India's semiconductor startup scene.
Innovative Indian Companies Revolutionizing Semiconductor Technology
Leading Semiconductor Plants Driving India's Tech Revolution
The Global Semiconductor Ecosystem
The Demand-Driven Supply Chain
The Semiconductor Use Cases
India's Semiconductor Applications
The Emerging Semiconductor Design Startup Community in India
India Expands Opportunities for Semiconductor Design Innovation
Semiconductor fabrication and assembly is primarily a capital intensive area, and is largely dominated by Taiwanese players
New opportunities are mostly emerging for Indian corporates, and foreign companies
Need for collaboration since knowledge gap is very high
Razor thin margins
Supply chain issue
Designing semiconductors often doesn't require significant capital investment
India has more than 20% design workforce and labor is available for affordable prices
Offers more customization opportunities
High profits margins
Opportunities for Indian Startups in the Semiconductor Services Sector
India’s Silicon Symphony: India’s Path In The Semiconductor Services Supply Chain
India's Chip Industry: Opportunities and Applications
India's Emerging Semiconductor Services Industry
The Role of Semiconductor Services in India's Technological Self-Reliance
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India's Semiconductor Industry: A Catalyst for AI Dominance
Global AI Semiconductor Market To Reach $190 Bn+ By 2030
Key Growth Drivers
Surge In Edge AI Processing Demand
The escalating requirement for real-time data processing at the edge, as opposed to centralized cloud servers, propels the demand for edge AI processing. This trend is anticipated to persist, fueling the necessity for specialized AI semiconductors capable of managing intricate computations essential for edge AI processing.
Advancements In Deep Learning & Neural Networks
Rapid progressions in deep learning and neural networks facilitate the creation of sophisticated AI applications, necessitating more potent and efficient AI semiconductors. With AI applications becoming increasingly intricate, the call for high-performance AI semiconductors is set to surge.
Proliferation Of AI-Powered Devices
The prevalence of AI-driven devices like smart speakers, smart home gadgets, and autonomous vehicles propels the demand for specialized AI semiconductors. As AI technology permeates various sectors, the requirement for high-performance, energy-efficient AI chips is poised to escalate, driving the demand for AI semiconductors.
$21 Bn+ The Market Opportunity For AI Semiconductor In India By 2030
Key Growth Drivers
US-China Relations
Amid escalating tensions between the US and China, India emerges as a favored destination for American semiconductor companies. Initiatives like Make In India and Design Linked Incentive (DLI) have piqued the interest of giants like Micron Technology, Microchip Technology, and Texas Instruments, prompting them to contemplate establishing manufacturing facilities in the country.
Focus On Smart Cities & Infrastructure Development
AI is set to play a pivotal role in realizing the Indian government's vision of developing fully integrated smart cities. AI technology is anticipated to underpin crucial functions such as connectivity, traffic management, and crime response, among others, facilitating the transformation of urban infrastructure.
Growing Adoption Of AI-Powered Consumer Devices
The Indian consumer electronics market is experiencing a surge in demand for AI-powered devices, including smart speakers, smart home gadgets, and autonomous vehicles. This upward trend is projected to persist, thereby fueling the demand for AI semiconductors across the Indian market.
AI Acceleration: The Power of Tensor Chips Over Traditional CPUs
AI's Next Frontier: Indian Startups and Semiconductor Design
AI Inference Hardware (IP) - Indian startups can focus on designing and developing low-power, high-performance AI chips for edge devices, such as smart home devices, autonomous vehicles, and wearables. Ola Krutrim is an early mover in this segment.
AI-Specific SoC (System-on-Chip) Design - AI-specific SoCs are custom-designed integrated circuits optimized for specific AI workloads, such as machine learning, computer vision, or natural language processing. AI-specific SoCs contain fixed-function hardware blocks, which are optimized for specific AI algorithms and models.
AI-Enabled Semiconductor Packaging - Startups can focus on developing AI-enabled solutions for optimizing semiconductor packaging, including 3D stacking, wafer-level packaging, and fan-out wafer-level packaging.
Cloud Based AI Infrastructure - Indian startups can tap the AI cloud infrastructure opportunity by creating tailored solutions for local businesses. These include scalable AI platforms, efficient resource management tools, and cost optimisation. By doing so, they can drive AI adoption, enhance efficiency, and compete globally. Some notable startups working in this segment include: GPU.net and Models Lab.
FPGA (Field-Programmable Gate Array) FPGAs are integrated circuits designed to provide high-performance computation with low power consumption. FPGAs' re-programmability is anticipated to make them a preferred choice in fields such as data centres, autonomous vehicles, and computer vision, among others
Factors Boosting India's Semiconductor Industry
China Plus One Policy
Amidst the global restructuring marked by the persistent chip shortage and escalating geopolitical tensions, nations are increasingly recognizing the need to diversify their supply chains. As countries actively seek alternatives to China, India's potential as an alternative destination gains prominence particularly in semiconductor sector.
Growing Consumer Electronics Market
India stands out as a prominent player in the global electronics market, as evidenced by the establishment of manufacturing facilities by numerous prominent companies like Apple within its borders. It is projected that electronic manufacturing output will surpass $300 Bn by 2030 in India. Additionally, India ranks among the largest consumers of electronics globally, leading to a significant demand for semiconductors within the country.
Demand In Automobile Sector
The automotive sector is undergoing significant global transformations, marked by the rising prevalence of electric vehicles (EVs) and self-autonomous cars, driving a surge in semiconductor demand. India's automotive industry, valued at $222 Bn+ in 2022, anticipates further. These combined factors contribute to an increasing demand for semiconductors, which serve as essential components enabling advanced functionalities in modern vehicles, such as power management, sensor integration, and advanced driver assistance systems (ADAS).
The Rise Of AI
AI has become ubiquitous worldwide, significantly impacting every sector with its continuous innovation, and its growth trajectory is poised to continue. This trend is mirrored in India, where AI adoption is substantial. The growth of AI is directly correlated with semiconductors, as semiconductor hardware is essential for AI utilization. The Indian AI semiconductor market is projected to reach $21 Bn by 2030. India is embracing AI across various industries, leveraging its transformative capabilities to enhance efficiency, productivity, and innovation.
The Government's Influence on India's Semiconductor Industry Growth
Semiconductor Fabs
The Scheme for setting up Semiconductor Fabs in India offers fiscal support to eligible applicants aiming to establish semiconductor wafer fabrication facilities in the country, attracting substantial investments. The fiscal support provided under this scheme varies based on the semiconductor technology node, with percentages of the project cost allocated accordingly: Up to 50% for 28 nm or lower, up to 40% for above 28 nm to 45 nm, and up to 30% for above 45 nm to 65 nm.
Display Fabs
The Scheme for setting up Display Fabs in India aims to attract investments for TFT LCD / AMOLED based display fabrication facilities, offering fiscal support of up to 50% of the project cost, capped at INR 12,000 Cr per Fab
Compound Semiconductor
The Scheme for setting up Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor Assembly, Testing, Marking, and Packaging (ATMP) / OSAT facilities in India provides fiscal support of 30% of the Capital Expenditure to eligible applicants for setting up such facilities.
Design Linked Incentive (DLI) Scheme
This scheme offers financial incentives and design infrastructure support across various stages of semiconductor design development and deployment. This includes a "Product Design Linked Incentive" of up to 50% of eligible expenditure, capped at INR 15 Cr per application, and a "Deployment Linked Incentive" ranging from 6% to 4% of net sales turnover over 5 years, capped at INR 30 Cr per application.
Key Challenges In Semiconductor Sector In India
Fab Technology Gap & High Costs
India's semiconductor fabrication ecosystem predominantly relies on mature technologies such as 40 nm or older processes, while leading players operate at 5 nm and below. This creates a substantial performance and efficiency gap. Additionally, the high investment costs, typically ranging from $4 to $5 Bn or more, pose a significant hurdle in establishing fabs.
Competition To Enter The Global Semiconductor Market
The global semiconductor industry, dominated by established players, presents barriers for new entrants like India. India faces challenges in catching up with technological advancements, overcoming cost barriers, establishing credibility in a competitive market and shortage of skilled manpower in India's semiconductor manufacturing sector
Material Science Dependence And Supply Chain
High-end chip manufacturing relies heavily on specialized materials such as ultra-pure silicon wafers, most of which are currently imported, leaving India vulnerable to global supplier dynamics and price fluctuations.
R&D & IP Protection
In this fast-paced sector, continuous innovation is imperative, demanding substantial R&D investment to address the technological gap. Moreover, the industry's reliance on innovation and robust IP protection poses challenges for India's IP regime. To attract companies and promote domestic R&D while safeguarding intellectual property rights, India must strike a delicate balance. Achieving this balance will be pivotal for India's competitiveness and growth in the semiconductor industry
Key Developments in India's Chip Manufacturing
Trade Deficit & Self Reliance
India grapples with a pressing economic challenge stemming from its semiconductor trade deficit, with imports surging to $67.6 Billion in 2022. Semiconductors alone reached $15.6 Bn, nearly doubling from the previous year. The heavy reliance on imports, primarily from China, Hong Kong, and Singapore, highlights the critical need for increased domestic production. India aims to elevate local sourcing to 17% by 2026, with the goal of substantially reducing import dependency. The Indian government has prioritized initiatives like "Make In India" to address this issue
Collaboration Between Indian And Foreign Companies
Indian corporations, multinational corporations (MNCs), and the government are collectively injecting significant investments into the semiconductor industry to fortify India's position in the global market. Major players such as Micron, Tata, and CG Power are leading this charge with substantial investments in semiconductor infrastructure.
Government Support
Government policies and initiatives are propelling India towards technological self-sufficiency and bolstering competitiveness in the semiconductor sector. With the central government committing to fulfilling 50% of semiconductor manufacturing setup costs, significant strides are being made. Additionally, several upcoming projects in the pipeline indicate a promising future for India's semiconductor industry, further solidifying its position on the global stage.
The Rise Of Design Startups
India contributes significantly to the global semiconductor integrated circuit (IC) design workforce, accounting for 20% of it. Moreover, there's a continuous rise in design startups in India, with over 100+ startups currently operating. The growth of these startups has surged by 2.4 times since 2014, and this trend is anticipated to continue upward. These startups cater to various industries such as automotive, electronics, and medicine, indicating a promising trajectory for India's semiconductor design landscape
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