India’s Consumption of Semiconductors

India’s Consumption of Semiconductors

Part of: Prelims and GS-III: Indian Economy & its challenges

Context: 

• The government has received proposals from five companies for setting up the electronic chip and display manufacturing plants with an investment of ₹1.53 lakh crore under the Semicon India Programme.

• India will consume semiconductors of around $70-80 billion to manufacture electronics products worth $300 billion by 2026 as envisaged in the government’s vision document. 

India Semiconductor Mission (ISM) has been setup to formulate and drive India’s long term strategies for developing semiconductors and display manufacturing facilities and semiconductor design ecosystem.

• Will enable a multi-fold growth of Indian semiconductor design industry by providing requisite support in the form of Electronic Design Automation (EDA) tools, foundry services and other suitable mechanisms for early-stage startups. 
• It will also promote and facilitate indigenous Intellectual Property (IP) generation and encourage, enable and incentivize Transfer of Technologies (ToT). 
• ISM will also enable collaborations and partnership programs with national and international agencies, industries and institutions for catalyzing collaborative research, commercialization and skill development.

Significance of the Sector

• Semiconductor chips are integral parts of the power train, chassis, safety systems, advanced driver assistance systems, and other parts of automobiles. 
• They are used more in passenger vehicles compared to commercial vehicles or two-wheelers
• The move to electric vehicles has led to increased demand of chips. For example, a Ford Focus typically uses roughly 300 chips, whereas one of Ford’s new electric vehicles can have up to 3,000 chips
• With supply of semiconductor chips slowing down, the production in automobile sector is also adversely impacted.

Do You Know?

• It is estimated that the semiconductor industry is growing fast and can reach $1 trillion dollar in this decade. 
• India can grow fast and reach $64 billion by 2026 from $27 billion today. 
• Mobiles, wearables, IT and industrial components are the leading segments in the Indian semiconductor industry contributing around 80% of the revenues in 2021. 
• The mobile and wearables segment is valued at $13.8 billion and is expected to reach $31.5 billion in 2026