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“Winning the semiconductor race will not be easy if India continues to run the existing race; instead, it should shift gears and target becoming the ecosystem player that the global semiconductor industry cannot run without,” the NITI Aayog said in its ‘Future of India’s Semiconductor Industry’ report released on Friday, May 29.
In the report, the leading government think tank argues that India needs to focus on developing its strengths, including domestic design talents, compound materials, and advanced packaging to develop a $120-150 billion semiconductor value chain by 2035.
Instead of spending crores on chasing trailing-edge sub-7-nanometer logic foundries, NITI Aayog says that India should choose ‘leadership and purpose over participation’. The report outlines a framework to transform India from a semiconductor importer to an indispensable global supplier especially as India currently imports almost 95% of its semiconductor chips at present.
Vision 2035: The focus on becoming indispensable
According to the report, India should position itself not just as a manufacturing location, but as a central pillar in the global semiconductor ecosystem, where chips are designed, integrated, packaged and powered for use globally. To do that, India shouldn’t work to ‘catch up’ with Taiwan, South Korea and China, instead, it should define its own pathway based on its strengths, particularly in design, with most major semiconductor players having R&D centers in the country.
According to the report, ‘India will play to its greatest strengths, including its design talent, high-quality workforce and materials and chemistry ecosystem potential. Building on these advantages, it should aim to emerge as a global leader in semiconductor design and system architecture, a top-three destination for outsourced semiconductor assembly and test (OSAT) and advanced packaging and a trusted supplier of critical semiconductor materials, particularly wide-bandgap and advanced packaging materials. In these domains, India should aspire to set standards, shape supply chains and create enduring global dependence, rather than limit itself to mere participation’
India has already started doing this with the Design-Led Incentive (DLI) scheme, with the government sanctioning ₹62,900 crore in that regard.
Challenges ahead
Manufacturing semiconductors is no easy task, as the global semiconductor industry is highly specialised, with a handful of countries depending on their respective strengths. For years, original design manufacturers (ODMs) headquartered in the US has developed semiconductor designs that factories and packaging units in East Asia have used to manufacture semiconductors for real-world use. These suppliers have built entrenched networks with these ODMs for designs and orders, and it will require India to meet stringent technical challenges and performance benchmarks to meet their requirements.
Though India now has access to leading semiconductor manufacturing technology through ASML, the challenges still remain, as we now need to systematically work towards building domestic capabilities by working on five strategic pillars- Pioneering, Policy and Investment, Production, People and Partnership. This would require sustained efforts for about 6-10 years, given that we’ve been quite late in developing our capabilities.
‘While enhancing domestic design capabilities will be essential, India should progress toward owning advanced IPs, developing next-generation architectures and building system-level innovation capacity to achieve this goal. At the same time, expanding domestic manufacturing—spanning mature nodes, compound semiconductors and advanced packaging—will reduce import dependence and create a resilient supply base for sectors such as telecom, automotive, defence and clean energy’ the report further said.
‘With sustained commitment and strategic clarity, India can build a competitive semiconductor ecosystem that strengthens economic resilience and positions the nation as a key player in the future of advanced technology’ the report concluded.
English (US) ·