India’s semiconductor ecosystem is beginning to gain momentum with decent investments in fabs and chip packaging units. These developments are expected to benefit adjacent industries like automotive, solar, electronics, aerospace and telecommunications, as per industry experts.
At a recent CII event, Rabindra Srikantan, Founder and Managing Director, ASM Technologies and Vice Chairman, CII Karnataka told BW Businessworld there’s huge growth potential in India’s semiconductor adjacent sectors, especially in areas such as such solar, smartphones and electronics and aerospace, with developments in one fueling opportunities in the others. He expects the smartphone industry to grow to USD 150-200 billion and electronics to USD 400 billion within five years, driven by both exports and domestic consumption.
“Adjacency here refers to precision engineering—working with highly precise materials and processes. Unlike larger industries like automotive, where precision is on a different scale, sectors like semiconductors and aerospace demand extremely fine precision. Bangalore has built a robust ecosystem of small, niche, and mid-sized companies over the past 40-50 years, thanks to its defense and space sectors. These companies already possess the capabilities and can easily transition into the growing industries of semiconductors and solar by recognising the similarities and expanding their reach,” said Srikantan.
These sunrise sectors—semiconductors, solar, ESDM and smartphones—are crucial as they are supported by tech skills, software and AI, which contribute 30-40 per cent of what goes into these industries. “There’s a massive opportunity for scaling, with the industry set to hire hundreds of thousands of people across various levels,” added the CII Karnataka Vice Chairman.
“The scale of electronics and mobile manufacturing is expanding rapidly in our country, and establishing semiconductor units will drive exponential growth in the automobile, medical, industrial transport, and consumer electronics sectors” – Electronics and IT Minister Ashwini Vaishnaw at SEMICON India 2024
While India is already strong in chip design (accounting for 25-30 per cent of global capacity), the country is now focused on manufacturing with USD 15-20 billion in greenfield fab investments so far.
Tata Electronics, in collaboration with Powerchip Semiconductor Manufacturing Corporation (PSMC), is establishing a USD 11 billion fab in Gujarat, with a capacity to produce 50,000 wafers per month. This fab will manufacture power management chips, microcontrollers and high-performance compute chips, vital for sectors such as automotive, computing, communications and artificial intelligence. The fab is also expected to create one lakh jobs.
Another USD 10-billion joint semiconductor fab proposal by Israel’s Tower Semiconductor and Adani Group is currently under review as part of the India Semiconductor Mission (ISM).
“We are very fortunate to be in this space because maybe this is actually the golden era of manufacturing in the country, and the opportunity is very huge across the segments” – Santosh Gundapi, Vice Chairman at CII Mysuru
Additionally, India is ramping up chip assembly, testing, and packaging (ATMP) capabilities with major projects like Tata’s USD 3.25 billion facility in Assam and a USD 900 million packaging plant in Gujarat from CG Power and Renesas. These facilities are expected to meet the growing demand for advanced packaging technologies in various industries, contributing to both local and global supply chains.
These efforts are supported by the country’s USD 15 billion semiconductor incentive plan, with an aim to reduce reliance on global supply chains and increase local production. These projects are expected to create approximately 20,000 direct and 60,000 indirect jobs.
According to a recent government press update, the construction of the four approved semiconductor units is progressing fast. These facilities are expected to attract nearly Rs 1.5 trillion (USD 18.15 billion) in investment and will collectively produce around 70 million chips per day
“Sky is the limit as semiconductors become integral to industries like automotive, where cars are essentially semiconductors on wheels. There’s tremendous growth in the medical field, with devices we carry—like phones, wearables and even embedded chips in the body—relying on semiconductors. As India becomes a data-driven economy, data centres will also be a major growth area, further expanding the role of semiconductors,” said Ajit Manocha, President and CEO at SEMI and former CEO at GlobalFoundries.
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