Industry executives are exultant that global semiconductor companies will see the India advantage, but a large local demand holds the key
India’s semiconductor demand was estimated at about $26 billion in 2022 and projected to reach $272 billion by 2032. The country’s electronics ministry envisions an overall products manufacturing output of $300 billion by 2026, versus $75 billion in 2022.
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“The ecosystem from across the globe will mobilise to have India as their preferred semiconductor destination,” N Chandrasekaran, chairman of Tata Sons, said in a statement on March 13, to mark the beginning of construction of two chip factories by the Indian conglomerate.
One will be a wafer fabrication plant and the other an OSAT (outsourced semiconductor assembly and testing) facility. The former in Dholera, Gujarat, and the latter at Jogiroad, Assam, “2,500 km apart, will have a lasting impact on the nation,” the Tata Group boss said.
The previous month Prime Minister Narendra Modi’s cabinet had approved these projects and another one led by the Chennai-headquartered Murugappa Group—also in Gujarat. Together, they will see investments of $15.2 billion, at least half of which will come from the government’s $10 billion fund launched in 2021 to attract global semiconductor manufacturers to India.
In the case of the Tatas, group company Tata Electronics will set up the semiconductor fab in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp (PSMC).
Previously, the government had approved a $2.75 billion ATMP (assembly, testing, marking and packaging) project, in Gujarat, led by America’s Micron Technology, a memory chip specialist—the contribution from the government fund is about two-thirds, with Micron investing $800 million. The hope is that together, these projects and those that may follow, will finally drag India into the hi-tech age as a more self-reliant maker of products and not just a consumer.