Monday, July 15, 2024

India’s Quest for a $300 Billion Electronics Production Milestone: An Emerging Semiconductor Revolution

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India’s Ambitious Leap Towards a $300 Billion Electronics Production Goal by FY26

In an ambitious drive to escalate its electronics production to $300 billion by the financial year 2026 (FY26), India is positioned on the cusp of a semiconductor revolution. This monumental growth trajectory is estimated to fuel a demand for semiconductors, ranging between $90-$100 billion, predominantly propelled by the surge in domestic mobile manufacturing. This presents a golden opportunity for the country, marking a significant leap from its current electronics manufacturing stature valued at nearly $103 billion. This upsurge translates into a semiconductor requirement of $26-$31 billion, given the conventional industry metrics where 25 to 30 percent of an electronics product’s bill of materials (BOM) comprises chip components.

The India Cellular and Electronics Association (ICEA) delineates that with the projected swell in electronics production to $300 billion by 2026, the semiconductor requisites would witness an exponential hike to $90-$100 billion. Remarkably, the contribution of mobile phone production to overall electronics manufacturing skyrocketed from 10 percent to an astounding 44 percent within just seven years. This leap underscores the dominance and exponential growth potential of the mobile manufacturing sector within the larger electronics manufacturing ecosystem.

During the FY23, the total import of integrated circuits (ICs) in India peaked at $16.14 billion, with a staggering $12 billion emanating solely from the mobile phone segment. Although the nation is venturing into the sophisticated domain of processor chips – a critical component for high-end smartphones – it acknowledges the existing gaps in indigenous production capabilities that are competitive at a global scale. Nevertheless, the ICEA emphasizes that there emerges a tangible commercial viability for fabricating processor chips tailored for entry-level smartphones within India, hinting at a strategic pivot for upcoming semiconductor fabrication plants (fabs).

Empirical data suggests that with a monthly output of approximately 1.5 million units of chipsets (spanning the 10-14 nm range), and assuming an output of 15,000 wafers of 300mm at a 70 percent yield rate—with a calculated number of dies per wafer standing at 148—the annual output is poised to reach about 18 million chipsets. This underscores the substantial capacity India has to meet a fragment of its semiconductor needs domestically.

The challenge now lies in translating this burgeoning semiconductor demand into indigenous production capabilities, thereby curtailing dependency on imports. Such a transition would not only elevate domestic procurement levels but also significantly enhance the feasibility and viability of semiconductor fabrication facilities in India.

Encouragingly, Prime Minister Narendra Modi, in March, inaugurated the foundation for three seminal semiconductor projects, aggregating to investments worth Rs 1.25 lakh crore. This historic move is set to culminate in the debut of the first ‘Make in India’ semiconductor chip by December this year, courtesy of the Micron semiconductor plant in Gujarat, marking a pivotal moment in India’s semiconductor industry.

As India strides towards this ambitious $300 billion electronics production goal, the convergence of policy, investment, and innovation will be paramount in leveraging the semiconductor boom. With substantial investments and a clear strategic vision, India is poised to not only meet its semiconductor requirements but also to establish itself as a significant player in the global electronics and semiconductor markets.

Alex Sterling
Alex Sterlinghttps://www.businessorbital.com/
Alex Sterling is a seasoned journalist with over a decade of experience covering the dynamic world of business and finance. With a keen eye for detail and a passion for uncovering the stories behind the headlines, Alex has become a respected voice in the industry. Before joining our business blog, Alex reported for major financial news outlets, where they developed a reputation for insightful analysis and compelling storytelling. Alex's work is driven by a commitment to provide readers with the information they need to make informed decisions. Whether it's breaking down complex economic trends or highlighting emerging business opportunities, Alex's writing is accessible, informative, and always engaging.

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