India's Semiconductor Push: Opportunities for the World and Thailand
Introduction
Semiconductors, which possess intermediate characteristics to conductors and insulators, are pivotal components in the building of electronic gadgets. Silicon is the most frequently employed semiconductor, however, there are other materials like germanium and gallium arsenide that are also used. This special property of semiconductors, allowing them to carry electric current under certain conditions and serve as an insulator in other instances, makes them essential in the electronic world. Today, their use has been so widespread that they are now regarded as a strategic element in countries all over the world. Semiconductors are the building blocks of modern technology, providing the power for our smartphones, computers, and other devices, enabling connections and advanced functionalities. With the rapid advancement of technology and the increasing demand for high-performance devices, the global semiconductor market has witnessed substantial growth. India, being one of the fastest-growing nations in this day and age is ahead of most of the countries in initiatives related to the development of the semi-conductor ecosystem. India's semiconductor sector is undergoing a massive expansion, with numerous opportunities for both global and Thai markets. With its sizeable pool of skilled professionals, supportive government policies, and the escalating need for electronics, India is turning into a major participant in the semiconductor industry. This article investigates the development trajectory of the semiconductor sector in India and looks at the potential collaborations and investments that could emerge from India's semiconductor boost. The semiconductor industry in India is making considerable attempts to establish itself as a primary player in electronics production. The government is actively encouraging the sector by proffering incentives and making a favourable setting for investment. According to Mr Ashwini Vaishnaw, Union Minister for Electronics and Information Technology, GoI, “India could see at least three more semiconductor fabrication units coming up in the next few months with cumulative investments to the tune of $8-12 billion”. Electronics Manufacturing Clusters (EMCs) have been identified to draw in both internal and external investments and research and development initiatives are being implemented to increase innovation and technological abilities. Skill development projects are being launched to form a competent workforce, and cooperation with international semiconductor companies and research establishments is being examined to gain global proficiency. The assistance of startups and entrepreneurship, supported by incubators and funding, is additionally helping the growth of the semiconductor industry in India.
India's semiconductor sector is experiencing an impressive upsurge, sparked by rising demand, government initiatives, and considerable investments. India's electronics consumption has seen a rapid rise, powered by aspects such as the implementation of 5G technology, the proliferation of cryptocurrency mining, and the government's push for digitization. This rise in demand has propelled India's semiconductor industry, which is projected to reach a market value of $55 billion by 2026. India's semiconductor sector is going through a transformative growth period, and some of the leading players of this growth journey, such as HCL Technologies, Vedanta Ltd, and Tata Elxsi, are primed to benefit from this growth and contribute to India's rise as a semiconductor powerhouse. With concerted initiatives to enhance local manufacturing, India is optimally placed to reduce its dependence on imports and create a robust semiconductor ecosystem. In the recent Vibrant Gujarat Global Summit, Mr Sanjay Mehrotra, CEO, Micron Technologies announced that Micron, “have begun phased construction and are proud to partner with Tata Projects to build this world-class facility” and the “first weighs 500,000 square feet of planned cleanroom space will be operational by early 2025.” Mr Sanjay Mehrotra further shared that the hiring has already begun and that they estimate that this project will create 5000 new direct jobs for Micron in Sanand, Gujarat and also additionally create 15,000 Community jobs over the coming years. The combined investment by Micron and the government throughout both phases could reach up to 2.75 billion US dollars. Government support will help fund such projects and facilitate access to essential semiconductor infrastructure and India's talent pool, strategic partnerships, and technical innovation will have a critical role in forming the future of the semiconductor industry in the country.
India's Semiconductor Push
In recent years, India's semiconductor industry has experienced remarkable growth, primarily due to its talent pool of engineers, government initiatives, and high demand for electronics. The country has an abundant supply of tech graduates, which has provided a significant boost to the sector and has been a key factor in attracting domestic and foreign investors. Currently, India ranks as a major consumer of semiconductors but remains heavily reliant on external sources for their supply. In 2021, India imported $5.38B in Semiconductor Devices, becoming the 7th largest importer of Semiconductor Devices in the world. In the same year, Semiconductor Devices was the 12th most imported product in India. This identifies the rising demand and consumption of semiconductors in India along with India’s dependency on foreign goods when it comes to semiconductors. Realising this and learning from the experience of the pandemic, the industry is also focused on developing systems that can mitigate the impact of unforeseen events and disruptions. Furthermore, strained relations between the United States and China have also contributed to the supply shortage, as China is a major chip manufacturer. India seeing an opportunity in this supply gap, it started several initiatives to encourage a semiconductor ecosystem in the country. India’s dependency on the foreign market of semiconductor goods does not only mean that it is missing an opportunity but also making India strategically and economically vulnerable which makes it essential for India to achieve self-reliance in this critical sector.
The government has taken several steps to support the industry, such as the "Make in India" campaign and the Production Linked Incentive (PLI) scheme, both of which have incentivized local manufacturing and brought in investments from global semiconductor companies. The government also launched the India Semiconductor Mission (ISM) in 2021. Additionally, the Ministry of Electronics and IT (MeitY) has committed a large sum of $10 billion to the India Semiconductor Mission (ISM). This investment includes funding, incentives for manufacturing, and the Design Linked Incentive (DLI) program, which assists in the development of products for both domestic and foreign markets. The National Policy on Electronics has also been implemented to promote the fabrication of semiconductors in India, along with various tax and financial benefits. Furthermore, research and development (R&D) is critical for semiconductor innovation, thus India has been collaborating with industry and academia to foster an R&D ecosystem and build a skilled workforce through education and training programs. Other schemes such as Chips to Startup (C2S) and Scheme for Promotion of Electronic Components and Semiconductors (SPECS) to support the industry. Lastly, incubators, accelerators, and funding have been established to promote semiconductor startups and entrepreneurship.
Opportunities for the World and Thailand
India's rapidly expanding consumer base and the rising demand for smartphones, TVs, and other electronic devices are driving the need for semiconductor chips. “The Indian semiconductor market was valued at approximately $23.2 Bn and is projected to reach $80.3 Bn by 2028, growing at a compound annual growth rate (CAGR) of 17.10% during the forecast period.” This growth in semiconductor demands surely presents an excellent opportunity for Indian companies and not just that, it also presents opportunities for foreign companies to enter the Indian market and tap into its robust demand. By establishing partnerships with local manufacturers or setting up their production facilities, international businesses can cater to the growing demand for semiconductors in India. The Indian market offers immense potential for foreign companies, given its large population and increasing purchasing power. For any business a country’s political stability is very crucial, hence the Indian government's support and push for local manufacturing and the availability of a skilled workforce make India an attractive destination for investments in the semiconductor sector. International businesses can leverage India's semiconductor drive to expand their market presence, access new customers, and tap into the country's growing demand for electronic devices.
The strengthening of India's semiconductor industry also holds implications for global semiconductor manufacturing diversification, a critical strategy for mitigating risks associated with regional concentration. In light of persistent challenges such as supply chain disruptions, India's emergence as a significant player in the semiconductor arena could contribute to a more resilient global supply chain by providing an additional source for semiconductor components. Furthermore, India's semiconductor initiatives may catalyze heightened collaboration with international companies and research institutions, fostering innovation and the dissemination of technological advancements on a global scale. For instance, the collaboration between Micron and TATA in building a world-class memory assembly and test facility in Gujarat, India. During the Vibrant Gujarat Global Summit in 2024 Mr Sanjay Mehrotra, CEO of Micron Technologies said, “I'm grateful to the Indian government and all the officials, with the great support from Bhupendra Bhai Ji and the central government and the state government, all of whom have been involved in making this investment possible. We have begun phased construction and are proud to partner with Tata Projects to build this world-class facility”.
Today, India and Thailand are emerging as key global players in the semiconductor sector. The Thai government has implemented a range of initiatives to bolster the growth of the semiconductor industry. These measures encompass incentives, tax breaks, and other forms of support designed to attract foreign investment and encourage domestic companies to participate in semiconductor manufacturing. Moreover, Thailand has made substantial investments in infrastructure tailored to support semiconductor manufacturing, including the establishment of industrial estates and technology parks equipped with the requisite facilities. This proactive approach has piqued the interest of several multinational semiconductor companies including companies from India, many of which have expressed intent to invest in Thailand. This emergence of opportunities in both India and Thailand does not hint only at increasing competitiveness but rather also creates an area of scope for shared interest and sustainable growth. Additionally, collaboration with international companies and institutions represents a common strategy within the semiconductor industry, and Thailand and India both have actively pursued partnerships with establishing and established semiconductor players to leverage their expertise and facilitate knowledge transfer. Both nations stand to benefit significantly from sharing knowledge, resources, and technology, thereby fostering innovation and growth within the sector. India, with its vast talent pool and supportive government policies, can offer valuable insights and support to Thailand in developing its semiconductor industry. Conversely, Thailand's well-established manufacturing capabilities and extensive experience in the electronics industry can serve as valuable contributions to India's semiconductor aspirations. Collaborative efforts between the two countries have the potential to spawn joint ventures, facilitate technology transfers, and foster research and development partnerships, thereby enriching both nations' semiconductor landscapes.
Positioned strategically with an advantageous location and a well-organized supply chain, Thailand emerges as an ideal collaborator for ventures with India in the semiconductor domain. Potential collaboration avenues include joint ventures, knowledge sharing, and technology transfer, all of which could yield substantial benefits for both countries. By collaborating with Indian manufacturers, Thailand could integrate itself into the semiconductor supply chain, thereby positioning itself as a significant partner in the entire production and distribution ecosystem. Moreover, as India draws investment into its semiconductor market, opportunities may arise for Thai firms to invest in or collaborate with Indian semiconductor companies, fostering joint ventures, research partnerships, or technology collaborations. Additionally, a partnership between India and Thailand in the semiconductor sector could facilitate the exchange of qualified professionals, thereby addressing the need for a skilled workforce in both nations.
Key Players in India's and Thailand's Semiconductor Industries:
India's semiconductor industry is home to several key players, including Tata Electronics, Bharat Electronics Limited, and Intel India, which have invested in research and development, manufacturing facilities, and collaborations to drive innovation and meet growing demand. In Thailand, multinational corporations like ON Semiconductor, Seagate Technology, and Western Digital have established manufacturing facilities, capitalizing on the country's skilled workforce and favourable business environment. Collaboration between Indian and Thai companies holds promise for mutually beneficial partnerships, technology transfers, and knowledge sharing.
Conclusion
In conclusion, semiconductors play a critical role in modern electronics, serving as the foundation for devices like smartphones, computers, and more. With India's semiconductor industry experiencing significant growth driven by demand, government support, and investments, the country is poised to become a major global player in this field. Initiatives such as "Make in India," Production Linked Incentives (PLI), and collaborations with international partners underscore India's commitment to developing a robust semiconductor ecosystem.
India's semiconductor push not only presents opportunities for domestic companies but also invites foreign businesses to tap into its burgeoning market. The country's political stability, supportive policies, and skilled workforce make it an attractive destination for investments in semiconductor manufacturing. Moreover, India's efforts to diversify global semiconductor manufacturing could contribute to a more resilient supply chain, mitigating risks associated with regional concentration.
Thailand, too, emerges as a significant player in the semiconductor sector, with proactive government initiatives and investments in infrastructure. India's burgeoning semiconductor industry not only beckons international collaborations but also presents a lucrative market for countries like Thailand to expand their footprint in this critical sector. Collaboration between India and Thailand holds promise for mutual growth and innovation. By leveraging each other's strengths in manufacturing, technology, and talent, both countries can establish fruitful partnerships, driving advancements in the semiconductor industry.
Given its advantageous geographical position and well-structured supply chain, Thailand emerges as an ideal collaborator for ventures in the semiconductor realm with India. Potential avenues for collaboration encompass joint ventures, knowledge exchange, and technology transfer, all of which could yield significant benefits for both nations. By partnering with Indian manufacturers, Thailand could integrate itself into the semiconductor supply chain, thus solidifying its role as a key partner in the entire production and distribution ecosystem. Furthermore, as India attracts investments into its semiconductor market, opportunities may arise for Thai firms to invest in or collaborate with Indian semiconductor companies, fostering joint ventures, research alliances, or technological cooperations. Additionally, a partnership between India and Thailand in the semiconductor sector could facilitate the exchange of skilled professionals, addressing the demand for talent in both countries.
Overall, the partnership between India and Thailand in the semiconductor sector presents a win-win opportunity, fostering knowledge exchange, technology transfer, and joint ventures. As both nations continue to strengthen their semiconductor ecosystems, they stand to achieve greater competitiveness and contribute significantly to the global semiconductor landscape.
References:
https://www.deccanherald.com/business/3-more-semiconductor-fabs-worth-8-12-billion-expected-vaishnaw-2788606
https://economictimes.indiatimes.com/small-biz/sme-sector/in-the-global-semiconductor-race-indias-chip-manufacturing-needs-to-get-the-chemistry-right/articleshow/93996080.cms?from=mdr
https://oec.world/en/profile/bilateral-product/semiconductor-devices/reporter/ind
https://www.investindia.gov.in/team-india-blogs/indias-emerging-prominence-semiconductor-superpower
https://www.youtube.com/watch?v=x4boPwolaF8&t=4879s
" Written By Ms. Ngawang Gamtso Hardy"
Economic Analyst, Deputy Editor-in-Chief
Royal Thai Embassy
