As India treads the path to become self-reliant or ‘Aatmanirbhar’ and achieve the dream of becoming a $5 trillion economy, it’s imperative to identify the high-potential sectors in the global market and seize the right opportunities. The pandemic has had a devastating impact on many sectors and the semiconductor chip industry too has been impacted globally.
As economies start inching back to normalcy, companies across the world have been struggling to meet the demand for a variety of essentials and electronics, including semiconductor chips that play a vital role in the production of various modern-day electronic devices.
What are semiconductors?
Semiconductors are tiny but powerful components that are used in the manufacturing of electronic devices, such as mobile phones, televisions, medical equipment and military hardware, among others. Chips or fabs, as they are often termed, are also used extensively in cars and other vehicles, which depend on these for calibrating their functioning. They are made using silicon, which has a high conductivity value, and are usually slotted into micro-circuits of various categories of electronic goods.
These are the parts of the product that make it smart, enabling consumers to surf the internet or use appliances, doctors to diagnose and treat diseases, and defense forces to use military equipment.
Why does the semiconductor industry have such a huge potential in the current times?
When the pandemic hit the world in 2020, the demand for electronic goods shot up as people imbibed a work-from-home lifestyle and sought new ways of entertainment. The requirement for electronic goods, such as mobiles and laptops, witnessed a big surge.
During the initial phase of the pandemic, several big carmakers across the world temporarily shut down their manufacturing lines anticipating a market slowdown. This led to the semiconductor chip manufacturers reassigning their production capacity to manufacturers of smartphones and laptops, which were in huge demand during the lockdown periods.
The world economies are now on a path to recovery and the demand for automobiles has also boomed. The sales of electronics of various categories have also started bouncing back and manufacturers are pulling out all stops to up their production. However, the catch here is that chip producers are struggling to respond. This has led to considerable shortage of semiconductors in the world, impacting sectors across the board.
Various countries have introduced programs to boost production of semiconductors, which is a capital intensive and relatively long gestation sector. However, since it takes over two years to set up a factory, the shortage is likely to persist for this period.
The global semiconductor industry is estimated to swell from US$ 426 billion in 2020 to over 800 billion in 2028, riding on the back of advanced technologies such as artificial intelligence, IoT products and machine learning.
The road ahead for India
While the shortage is expected to last for at least the next one and a half years, India is poised to make it big in the semiconductor arena. India imports all of its semiconductor requirements of about US$ 24 billion and its demand is expected to go up to US$ 100 billion by 2025 as it expands its 5G, electronics and other sectors.
The Government has been taking active steps to support and establish the semiconductor industry in India, which will go a long way in building domestic capacity, reducing foreign exchange outflows and creating new jobs.
Over past few months, several big firms and conglomerates have expressed interest in the manufacturing of semiconductors in India. The Government too has expressed its intent to offer support to firms in a bid to lay down the bedrock on which a booming semiconductor industry can be built in India.
Given the initiatives being taken by the Government and the enthusiasm of big companies to bring the semiconductor industry to India, the country is all set on the path to become truly ‘Aatmanirbhar’ in the electronics sector.