With India possessing talent, deep knowledge and thriving domestic market, all of which are conducive to build a semiconductor ecosystem, the country is gearing towards becoming a significant player in chips manufacturing in the world
India and Singapore, during Prime Minister Modi’s visit to that city-state, signed a memorandum of understanding (MoU) in the field of semiconductor development. This agreement has opened up opportunities for Singapore’s semiconductor companies to enter the Indian market.
 
During his trip, Modi met key CEOs from Singapore’s semiconductor industry. The MoU focuses on collaboration in such areas as talent development, knowledge exchange and manufacturing.
 
Modi encouraged Singapore’s business leaders to consider India a viable location for expansion. Both countries will work together to build a robust semiconductor supply chain and align regulations related to semiconductor production.
 
Singapore plays a significant role in the global semiconductor market, contributing around 10% of the global semiconductor production, 5% of fabrication capacity and 20% of equipment manufacturing.
 
Major global semiconductor companies, including Qualcomm, AMD, Applied Materials, Global Foundries and Micron, operate in Singapore.
 
While Singapore faces limitations in terms of land and labour, India offers ample land and skilled labour, making it an attractive option for Singapore’s semiconductor companies looking to expand.
 
India’s semiconductor ambition
 
India is actively involved in the global semiconductor production industry, not just watching from the sidelines. With a large electronics market and a skilled workforce, India is a key player in the global technology scenario.
 
Recognizing the economic and strategic value of technology in the future, India has started working towards creating a strong semiconductor industry.
 
India is learning from the disruptions in the global semiconductor industry caused by the COVID-19 pandemic. 

In the recent past, India has begun expanding its efforts across all aspects of the semiconductor industry, including research, chipmaking, design, fabrication, equipment supply and talent development, instead of just focusing on one area.
 
India’s involvement in this system is both well-timed and strategically significant for expanding the diversity of the global supply chain. In the technology industry, companies value political stability and a sizable domestic market when considering expansion of projects.
 
India’s stable political climate and significant domestic market make it an appealing choice for strategic semiconductor manufacturing.
 
The ISM policy framework has played a crucial role in attracting companies and investments for chip assembly and fabrication.
 
The government is providing 50% capital support to new players in various semiconductor fields and offering incentives for establishing infrastructure within industrial clusters.
 
This has generated considerable global interest. Gujarat is the first state to offer an additional 25% capital expenditure support, further boosting the appeal of India’s semiconductor policy.
 
Goal for global hub status 
Starting in 2021, India introduced the India Semiconductor Mission (ISM) and offered significant subsidies and a favourable business environment to attract major industry players.
 
This has marked the beginning of a new era in the Indian semiconductor industry. India aims to position itself as a dependable hub for the supply chain, leveraging geopolitical tensions between major global powers.
 
The semiconductor industry, which involves designing, making, and selling electronic products, is a complicated worldwide network. Historically, it has mainly been centered in the United States, along with countries like South Korea, the Netherlands, Japan, Taiwan and China.
 
Due to disruptions caused by the pandemic and increased labour costs, many global manufacturers chose to spread out their supply chains, moving some productions away from China.
 
Furthermore, the uncertainties in global politics, such as trade tensions between China and the United States and actions taken by the Biden Administration to reduce risks, have led companies to look for other places to produce or procure their products outside China.
 
During this shift in the industry, India, and countries in South-East Asia, such as Malaysia, Singapore, Thailand, Vietnam, and Indonesia, have become popular choices for assembly and testing operations. There are also plans for potential manufacturing operations in future.
 
Growth and innovation on the horizon 
The government has given the green light to Kaynes Semicon Private Limited to establish a semiconductor facility in Sanand, Gujarat, with an investment of Rs 3,300 crore.
 
The plant is expected to produce 60 lakh chips daily. Besides Kaynes Semicon, there are currently five semiconductor projects approved by the Centre, including a chip fabrication plant in Dholera, Gujarat, and four chip packaging facilities.
 
Three packaging units are in Sanand, Gujarat, and one is in Morigaon, Assam. The total proposed investment for these projects is Rs 1.5 lakh crore. 

The chip fabrication unit in Dholera is a collaboration between the Tata Group and Powerchip Semiconductor Manufacturing Corporation from Taiwan, with a capacity of 50,000 wafer starts per month (WSPM).
 
The Maharashtra government recently approved a significant investment proposal of $10 billion (Rs 83,947 crore) for a new semiconductor chip manufacturing facility.
 
The collaboration between Tower Semiconductor and the Adani Group aims to establish the facility in Taloja, Panvel, within the Navi Mumbai suburbs of Raigad district.
 
The initial phase will see a capacity of 40,000 WSPM, eventually expanding to 80,000 WSPM. Deputy Chief Minister Devendra Fadnavis shared that Rs 58,763 crore would be invested in the first phase, with the remaining Rs 25,184 crore in the second.
 
Conclusion
Global management consulting firm McKinsey has predicted that the semiconductor industry will grow into a trillion-dollar global market.
 
The India Electronics and Semiconductor Association (IESA) estimates that India’s semiconductor sector could reach USD 100 billion by 2030.
 
*** The writer is a Director of ADD Engineering Components, India, Pvt. Ltd, a subsidiary of ADD Engineering GmbH, Germany; views expressed here are his own