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HomeBusinessIndia's chip component market will reach $300 billion during 2021-2026, say IESA...

India’s chip component market will reach $300 billion during 2021-2026, say IESA and Counterpoint Research MIGMG News

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In a joint study conducted by the Indian Electronics and Semiconductor Association (IESA) and Counterpoint Research, it was found that the cumulative revenue of the semiconductor components market in India will reach $300 billion between 2021 and 2026.

According to the report, titled ‘India Semiconductor Market Report, 2019-2026’, the country is on track to become the world’s second largest market in terms of volume and growing demand for semiconductor components across a variety of industries and applications.

The research focuses on incremental modeling unit as well as revenue demand for semiconductor components spanning the entire BoM for end devices and equipment categories across seven major sectors in India from a domestic and an export perspective.

The sectors mentioned in this case include mobile and wearable devices, information technology, automotive, industry, telecommunications, aerospace and defense, and consumer electronics.

The report also includes detailed recommendations, potential policies, and a framework for developing a robust domestic semiconductor ecosystem in order to enhance local production and supply.

What data show

According to the data presented in this report, about 80% of total semiconductor component revenue comes from information technology (20%), industry (9%), as well as mobile and wearable devices (51%).

Apart from that, consumer electronics accounts for 7% of revenue, followed by telecommunications (5%), automotive (5%), and aviation and defense (3%).

The report also noted that while the country has become one of the largest consumers of electronic components and semiconductors, the majority of components are imported, providing the country with limited economic opportunities.

The data showed that only 9% of these semiconductor requirements are currently met domestically.

However, the report also stated: “The government’s vision under ‘Make in India’, ‘Atmanirbhar Bharat’ and ‘PLI Scheme’ along with its ongoing drive towards reviving infrastructure through the adoption of digital technology will boost local manufacturing of semiconductor components.”

The researchers predict that in terms of locally sourced semiconductor components by segments, in the mobile and wearables segment, the proportion was 4% in 2021 but is expected to be 9% by 2026. Similarly, the report indicated a significant jump across all segments.

K Krishna Moorthy, CEO and President of IESA, said, “Before the end of this decade, there will be nothing that will not be affected by electronics and ‘chip’ everywhere. Whether it is combating carbon emissions, renewable energy, food safety, or healthcare, the A semiconductor chip will be universal. Imagine this – all children across India are taught in virtual classrooms by the best teachers in the country. The chip makes it possible.”

Furthermore, Counterpoint Research Director of Research Tarun Pathak said that with the gradual transition from feature phones to smartphones, the proportions of advanced logic processors, memory, integrated controllers, sensors and other components have increased.

According to him: “This will continue to drive the value of semiconductor content in smartphones, which remains a low-penetration sector in India, buoyed by the advent of wearables such as smartwatch and TWS.”

The future of semiconductors in India

The research report indicated that in terms of revenue, the end equipment market in India was valued at $119 billion in 2021, and from 2021 to 2026, it is expected to grow at a compound annual growth rate of 19%.

From component sourcing to design manufacturing, India’s Electronic Systems Design and Manufacturing (ESDM) sector is expected to play a significant role in the country’s overall growth, according to researchers.

In addition, the report stated that the Indian semiconductor industry is poised for rapid expansion in the coming years, helping the Indian economy to reach the next level in terms of domestic consumption and exports.

He also noted that while domestic production is currently low, India has huge potential to become a leading supplier of semiconductor components in the coming years if talent and resources are properly utilized.

The study also highlighted that if there is an increase in domestic manufacturing and supply of semiconductor components, “the semiconductor market could be a major contributor to economic growth, propelling India to become a $5 trillion economy.”

Regarding the latest report, Eswara Rao Nandam, President and CEO of Polymatech Electronics Private Limited, told News18 that $300 billion is estimated at current use, but according to him it would exceed that limit.

Similarly, Sanjay Gupta, Vice President of India and Managing Director at NXP Semiconductors, believes that with the increasing focus on digitalization, the demand for semiconductors is bound to grow many times over.

But there are concerns about India’s vision of becoming a global semiconductor hub — especially when it is up against chip giants China and Taiwan.

In this case, while citing Prime Minister Narendra Modi’s Independence Day speech on the country’s “techade” vision of becoming a global manufacturing hub, Gupta said: “It is clear that the Indian semiconductor industry is in the process of being emerging, but efforts to become the global manufacturing hub are becoming visible. Just with the pioneering vision of the government like “Digital India” and “Made in India.” With these stringent efforts and focus on skills development, infrastructure etc., it is not far from the day when the country will witness a paradigm shift from being a “chip maker to a chip maker.” “.

According to Nandam, Polymatech believes that India will be in the “leadership seat” of the semiconductor industry by 2035.

It also highlighted the fact that strong commitment and support from central and state governments will be critical.

The industry leader said: “Polymatech will (in particular) produce the latest Fab by 2024 in the reverse integration stages.”

While further explaining, he said that traditional manufacturing, which uses a lot of water, can be discouraged because this takes up a lot of space, pollutes a lot of water, and drains a lot of natural resources.

Nandam said, “Polymatech adopts the latest technologies such as plasma/laser cutting which requires very little water to zero and also adopts Industry 4.0 theme for the highest quality of products.”

He also said that a proper and rapid subsidy disbursement mechanism over smaller time intervals will attract promoters to invest in this business. According to him, “The inclusion of semiconductor companies on a fast track could also help the industry grow faster because it needs huge capital expenditures.”

Finally, Nandam suggested that India needs to invite semiconductor machine manufacturers because according to him, there are few companies producing these machines and lead time is around 180-270 days plus sailing time.

News18 also reached out to Vivek Tyagi, the president of IESA. While noting concerns about the geopolitical situation in East Asia, he said chip manufacturing capacity could come under strain in the future.

“Apropos, it is a corollary that entities involved in raw materials and corresponding supply chains are more likely to relocate to locations, which offer better facilities and policies,” Apropos said.

So Tyagi believes that self-sufficiency and local semiconductor manufacturing are essential requirements in light of this crisis, and the Indian government is working to meet them.

Moreover, he said, “While in the current situation few countries have the capabilities to create new semiconductor FAPS, various policies offer production related incentives, design related incentives, establishment of Indian semiconductor mission, SCL reorganization, issuance of state policies , etc., will achieve semiconductor manufacturing as well as design. Establishment of Fab facilities is a complex and complex capital. Strong R&D along with a focus on skill development will be the cornerstones of this endeavor. It is a daunting task ahead but it is a work in progress.”

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