Editorial: India must reassess semiconductor strategy
Instead of chasing cutting-edge chip manufacturing, the country should shift gears and focus on advanced packaging, system integration, talent development and become an ecosystem player
If India is to realise its dream of emerging as a major global player in the semiconductor sector, it needs to reassess its core strengths and craft suitable strategies. The stark reality is that the country imports 90-95% of the semiconductors it uses today, and the domestic demand is projected to exceed $240 billion by 2035. India spent nearly $150 billion importing semiconductor products between 2017 and 2025. In this scenario, it would be imprudent to reinvent the wheel and end up as an also-ran in the global race, particularly in the face of the widening gap between demand growth and limited domestic capability. Given the complex nature of the industry and the changing geopolitics surrounding it, the Centre must favourably look into a wide range of suggestions made by the NITI Aayog to make India an indispensable player in the global semiconductor value chain. One of the important recommendations made by the think tank is that India must stop trying to catch up with global leaders in cutting-edge semiconductor manufacturing and instead focus on areas where it can become irreplaceable within the global chip supply chain. It has been rightly argued that we should move away from the race to build the world’s most advanced chips and focus instead on advanced packaging, system integration and manufacturing scale. Winning the semiconductor race will not be easy if India continues to run the existing race; instead, it should shift gears and target becoming the ecosystem player that the global semiconductor industry cannot run without.
India’s semiconductor demand is projected to grow at a compound annual growth rate of 19%. This demand is expected to be driven by electronics manufacturing, rapid expansion of data centres, increasing semiconductor content in vehicles, particularly electric vehicles and advanced driver assistance systems (ADAS), and the rapid adoption of artificial intelligence across consumer and enterprise applications. Given the rising demand, excessive dependence on imported chips poses risks not only to economic growth but also to national security, as many semiconductor components used in defence systems are sourced from abroad. The global chip supply chain is currently undergoing massive geopolitical pressure as the United States and its allies are trying to reduce their dependence on Chinese semiconductor players and their markets. Though India traditionally had a strong base for the semiconductor design industry, hardware manufacturing has remained elusive. Over the last two decades, several consortia made multiple attempts at chip-making, but things never worked out. It is estimated that India will require between $135 billion and $180 billion in capital expenditure over the next decade to build infrastructure for semiconductor manufacturing, packaging, design and related ecosystem capabilities. The Centre must consider NITI Aayog’s key recommendations, including setting up National Fab Academy, semiconductor-focused engineering curriculum, large-scale technician training programmes and a global talent initiative, to attract experienced semiconductor professionals.
