What does India’s semiconductor opportunity look like?
The bedrock upon which the modern tech world stands, semiconductors power all kinds of devices today. And India is pushing for a domestic set-up to curb the shortages we’ve seen during the pandemic.
With our lives becoming increasingly dependent on technology, semiconductors are the bedrock upon which the modern world stands. From powering our devices to enabling our communication systems to drive our cars, these tiny chips facilitate a myriad of applications.
According to a study conducted by McKinsey, the surge in the influence of digital technology has led to significant growth in semiconductor markets, with sales growing by more than 20% to about $600 billion in 2021. The analysis, predicated on various macroeconomic assumptions, suggests that the global semiconductor industry is expected to sustain an aggregate annual growth ranging from 6% to 8% through 2030, paving the way for a decade of growth, and is projected to become a trillion-dollar industry by 2030.
However, given the vitality of these tiny yet potent components, countries across the world are constantly trying to secure their foothold in semiconductor production. While the industry has long been dominated by a select few countries—the United States, China, Taiwan, South Korea, and Japan, there is a growing realisation that diversification of the production and supply chain of semiconductors is important.
The OCVID-19 pandemic, which witnessed a severe shortage of the chip has further exacerbated this realisation, which has led to companies and governments pushing for a conducive environment for semiconductor manufacturing, and India is no exception to this.
As per estimates by Invest India, the domestic semiconductor market was valued at approximately $23.2 billion and is projected to reach $80.3 billion by 2028, growing at a compound annual growth rate (CAGR) of 17% during the forecast period. This growth is expected to be largely driven by key government initiatives such as the Production Linked Incentive (PLI) scheme for the electronics sector, Design Linked Incentive (DLI) scheme, Chips to Startup (C2S) and Scheme for Promotion of Electronic Components and Semiconductors (SPECS), among others.
The chip manufacturing and design supply chain remains global and interconnected to a great extent, as the complexity requires specialisation, materials, and talent that no single country can provide. When it comes to challenges, one major challenge that the industry is facing today (globally) is the talent gap. A study by Deloitte suggests that there is a need for over one million skilled workers in the semiconductor industry by 2030, averaging more than 100,000 annually.
Now, India, with its 1.4 billion population and robust engineering ecosystem, has the potential to bridge the talent gap that persists in the industry. However, as India progresses on its journey to become a global semiconductor hub, it is imperative to highlight that the universities in India currently don’t have state-of-the-art infrastructure labs to conduct semiconductor-related research, which, in turn, is what is keeping a number of students away from entering the sector.
Despite the efforts by the government to address this gap, there is more that needs to be done in order to build a highly skilled workforce that can sustain the growth of semiconductor industry.
Addressing talent gap
According to an internal report by the Ministry of Electronics and Information Technology, while India has a big pool of semiconductor design engineers, there is no skilled talent available to handle chip manufacturing plants in India. The report suggests that there will be a requirement of 10,000-13,000 human resources to meet industry requirements by 2027.
In this context, it becomes imperative to mention that skilling the workforce on semiconductor manufacturing will be essential in the coming years. With an expected launch of the Pradhan Mantri Kaushal Vikas Yojana 4.0, it would be good to see courses on semiconductor manufacturing—skilling lakhs of youth on aspects of chip manufacturing and plant handling. Further, to make the workforce future-ready, it is important to start skilling students right from the undergraduate level. Hence, it would be promising to witness government efforts in promoting undergraduate courses and infrastructure related to semiconductor design and manufacturing.
However, building a skilled workforce extends beyond providing training and education. At this point, it also becomes important to foster an environment that is conducive to innovation and entrepreneurship. Therefore, focusing on facilitating collaboration between academia and the industry is essential, particularly with leading semiconductor manufacturing companies based out of countries such as the United States, Taiwan, South Korea, among others.
Hence, with concerted efforts towards skilling and training our workforce to become industry-ready, India can pave the way towards a semiconductor-powered future, ensuring that technological advancement and societal progress go hand-in-hand.
(Jayanth Murthy is the Joint Managing Director, South Asia & Africa at Kaizen Institute)
Edited by Saheli Sen Gupta
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)