Yes, I've finally chosen an Industry : Semiconductors
Day 6 of Uncovering Manufacturing Sector : Semiconductor Industry
I was so confused while selecting an industry that I left it to the universe—"Whatever the most recent news on my Inshorts notification is, I’ll pick that industry." And guess what popped up (not immediately, but after 3-4 irrelevant ones)?
"First Made-in-India semiconductor chip to be ready by 2025: Union Minister Ashwini Vaishnaw"
Then dots connected, Last to last time, while decoding China+1, the biggest chunk of Production-Linked Incentive was allocated to semiconductors and electronics. Then, analyzing export-import data, I saw a 78.97 % increase in electronics exports—under which semiconductors fall. And thanks to one of my friends who suggested it, I didn't pay much heed to, but nvm!
What are Semiconductors? (Picked up some technical stuff)
Imagine a material that isn’t quite a full conductor like copper but isn’t a total insulator like glass either. (Thank God I studied Science in my 10th Std)
That’s a semiconductor (somewhere between conductor and insulator), a special kind of material, usually silicon, that can control the flow of electricity. But when people talk about semiconductors today, they’re mostly referring to semiconductor chips—those tiny yet powerful components that fuel everything from smartphones to supercomputers.
What Do Semiconductors Actually Do?
Think of semiconductors as the brain of modern technology. These chips process, store, and transmit information through tiny electrical switches called transistors. Memory chips hold data, processors execute instructions, and wireless chips allow devices to communicate. It all comes down to controlling electrical currents at microscopic levels, turning signals on and off in patterns that make digital technology work.
How Are Semiconductor Chips Made?
The foundation of a semiconductor chip is a thin, circular wafer of silicon, refined from single crystals. But a wafer alone isn’t enough—it needs transistors. These are built by adding and removing ultra-thin layers of different materials using advanced techniques like lithography and etching. The result? A chip packed with billions of transistors in an area no larger than your fingernail.
Why Do Semiconductors Matter?
In short, semiconductors power the digital age. From your phone’s touchscreen to the AI running complex algorithms, everything relies on these microscopic pellets. As technology advances, semiconductors will only become more critical, making computing faster, smarter, and more efficient than ever.
Global Semiconductor Industry Overview
The global semiconductor industry is projected to reach $1.1 trillion by 2030, growing at a CAGR of 8.6%. Asia-Pacific dominates the market with 50%+ global semiconductor sales, followed by North America and Europe.
Leading Semiconductor Manufacturers by Country:
Taiwan (TSMC - Largest global manufacturer)
South Korea (Samsung)
United States (Intel, Qualcomm, NVIDIA)
China (SMIC)
Japan & Singapore (Key players in semiconductor equipment and fabrication)
India’s Current Position:
India imports over 90% of its semiconductors due to the absence of local chip manufacturing.
The domestic semiconductor market is valued at $27 billion in 2023 and expected to reach $64 billion by 2026 at a CAGR of 19%.
India is focusing on building a self-sufficient semiconductor ecosystem under the Make in India and PLI initiatives.
PLI Scheme for Semiconductors (Main focus area, why?)
Semiconductors and Electrical appliances get the biggest chunk of PLI Scheme.
Budget Allocation: INR 76,000 crore (~US$ 10 billion)
Objective: Strengthen India’s semiconductor manufacturing capabilities.
Comparison with Other PLI Sectors:
Automobile: INR 25,938 crore
Advanced Chemistry Cell Manufacturing: INR 18,100 crore
Types of Semiconductor Manufacturing Covered Under PLI (Ahhh Boring)
Silicon Semiconductor Fabrication (Fab) Plants: These facilities manufacture semiconductor chips using 300mm wafers, producing 40,000 wafer starts per month.
Display Fabrication Facilities: Used to manufacture LCD and AMOLED displays, with a production capacity of 60,000 panels/month (TFT LCD) or 30,000 panels/month (AMOLED).
ATMP/OSAT Facilities: Focus on Assembly, Testing, Marking, and Packaging (ATMP), ensuring quality assurance of chips.
How India can make it big in the chip manufacturing (to justify the biggest allocation)?
Growing Electronics Demand: India’s electronics market is projected to reach $400 billion by 2025, increasing the need for domestic semiconductor production.
Government Initiatives & PLI Incentives: The $10 billion semiconductor incentive supports chip fabrication and design.
Strategic Partnerships: Companies like Vedanta-Foxconn and ISMC are setting up semiconductor plants in India.
Skilled Workforce: India’s engineering talent is a key advantage, with global firms like Intel and Qualcomm already operating design centers here.
Key players include:
Tata Elxsi – Specializes in semiconductor design, AI, and 5G solutions.
BEL(Bharat Electronics Ltd) – Develops semiconductor devices for defense applications.
HCL Technologies – Offers digital transformation and semiconductor services.
Sankalp Semiconductor – Provides analog and digital design services.
Vedanta-Foxconn – Plans to establish semiconductor manufacturing facilities in India.
Micron Technology – Investing in semiconductor manufacturing in India.
Here, another scheme in place for boosting the semiconductor industry:
Indian Semiconductor Mission (ISM)
Launched on December 15, 2022, the Indian Semiconductor Mission (ISM) is part of the Digital India Corporation to establish a robust semiconductor ecosystem.
Why ISM Matters?
COVID-19 supply chain disruptions highlighted global dependence on a few semiconductor hubs like Taiwan, Japan, and China.
ISM aims to boost semiconductor manufacturing, packaging, and design capabilities.
Government incentives worth INR 76,000 crore attract investments in semiconductor infrastructure.
Major projects approved under ISM:
Micron’s ATMP plant
Tata Electronics’ fabrication and testing facilities (Gujarat & Assam)
CG Power’s testing and packaging plant
Challenges Hindering India’s Semiconductor Growth
High Initial Investment: Establishing fabs costs billions of dollars.
Infrastructure Deficiencies: Limited power supply, water resources, and logistics pose challenges.
Import Dependence: 90% of chips are still imported, making self-reliance a long-term goal.
Technological Gaps: Advanced manufacturing of sub-10nm chips requires R&D and expertise.
Global Trends Influencing Semiconductor Growth:
AI & IoT – Increasing demand for high-performance chips.
Electric Vehicles (EVs) – Growing need for power semiconductors.
5G Deployment – Expanding use of RF semiconductors.
I’m so excited to dive deeper into what’s ahead—going company to company, news to news, jargon to jargon. Make sure you tag along!
Signing off,
Abhishree
Great industry pick for research.