India is emerging as a preferred alternative destination for semiconductor OEMs, with several factors in the country’s favour.
The global semiconductor industry is poised to cross $1 trillion in size by 2030. India can carve a strong niche for itself owing to four elements – talent, domestic demand, government policies and startups.
Endiya Partners, an early-stage venture capital firm, in its report, India’s Semiconductor Moment: Perspectives from DEMO, noted that the country is poised to become a critical node in the globe’s technology supply chain. DEMO stands for – Deeptech Exponential Market Opportunities.
The global semiconductor industry is undergoing changes as countries want to create a level of self-sufficiency without overdependence on another country. The United States, China and the European Union have unveiled plans to build their own capabilities. Today, Taiwan accounts for 60% of advanced semiconductor manufacturing.
It is here that India can play a key role, as many semiconductor manufacturers are keen to diversify their supply chain and the country emerges as a trusted alternative manufacturing destination. And there are several positives to make this a reality.
Firstly, India now accounts for 20% of the global semiconductor talent pool with 1.5 lakh such design engineers, but this has not translated into the manufacturing side, as it holds just 0.5% of the global fabrication facilities. This would mean that steps are needed to bridge the talent gap between design and manufacturing.
Secondly, take the domestic demand for semiconductors in the country, which is projected to touch $103 billion by 2030 from the level of $52 billion in 2024. This is driven by AI infrastructure, electric mobility, defence modernisation and telecom.
Thirdly, the India Semiconductor Mission (ISM), launched in December 2021 with an outlay of Rs 76,000 crore ($8.67 billion), has already mobilised Rs 16 lakh crore (around $18 billion) in private investments across 10 approved projects, creating capacity for about 90 million chips per day, according to the report.
India already has the presence of leading semiconductor companies like Intel, AMD, NXP, Qualcomm, Texas Instruments, but these are purely design-focused operations.
Lastly, Indian startups have started to play an active role as venture investment rose from $5 million (2023) to $28 million (2024), supported by the India Deep Tech Investment Alliance’s $1 billion commitment for the next decade. The Design Linked Incentive (DLI) Scheme has sanctioned Rs 803 crore for 23 projects, supporting 278 institutions and 72 startups, leading to six tape-outs and ten venture-funded companies.
However, the road from a design-focused semiconductor industry to one of manufacturing faces the challenges of inadequate infrastructure, a smaller number of skilled professionals and access to know-who. The report says that by 2027, there will be a shortage of 10,000-13,000 fab specialists.
The Indian semiconductor industry has all the ingredients to become a key destination for the globe, and a little push from all the stakeholders can make the difference.
