Semiconductors and Potential of Indian Semiconductor Industry
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What Is a Semiconductor? And The Semiconductor Industry
A material made of silicon that conducts electricity more than an insulator like glass but less than a pure conductor like copper or aluminum is known as a semiconductor. With the addition of impurities, a process known as doping, their conductivity, and other properties can be changed to suit the unique requirements of the electronic component in which they are found.
Semiconductors, also referred to as chips or semis, are used in many items, including computers (integrated circuits), smartphones, electronic devices, gaming equipment, and medical supplies.
One of the many valuable characteristics of semiconductor devices is their ability to show changeable resistance, pass electrons more easily in one direction than the other, and respond to heat and light. In reality, they do energy conversion, switching, and signal amplification. As a result, practically all industries utilize them extensively, and the businesses that produce and test them are seen as great predictors of the state of the economy as a whole.
Developing devices that are more compact, quicker, and less expensive is essential for semiconductor business success. Being small has the advantage of allowing more power to be packed into the same chip. A chip can perform its task more quickly the more transistors it has. As a result, there is intense competition in the sector, and new technologies drive down the cost of producing one chip.
According to Bloomberg 2021 research, chip manufacturers should aim for yields (the proportion of operational devices to all made devices) of at least 90%. This calls for highly pricy production procedures.
Because of this, many semiconductor companies choose to outsource some or all of the manufacturing while maintaining control over design and marketing. These businesses, referred to as "fabless chip producers," have a great potential for growth since they are not burdened by the expenses related to production, or "fabrication."
By FY 2025, India's demand for the semiconductor industry will total $400 billion USD.
Since the sectors that use semiconductors as inputs are also experiencing tremendous demand, the Indian semiconductor industry has significant growth potential. There is an increasing need for semiconductors since end-use industries such mobile devices, telecommunications equipment, information technology, office automation (IT & OA), industrial machinery, autos, and many others all require computing in some capacity. The idea of the Internet of Things (IoT) is now gaining traction, and the following generation of connected gadgets will significantly boost demand for sophisticated computers and semiconductors.
The electronics system design manufacturing (ESDM) sector in India is expanding at an extremely rapid rate. With more than 120 units, India also has a significant design base. Over 20,000 engineers are working on various facets of chip design and verification in India, according to the Department of Electronics and Information Technology (DeitY), where nearly 2,000 chips are designed each year. The growth of India's ESDM ecosystem is a top priority for the government. For establishing electronics manufacturing facilities in India, a number of subsidies and other incentives are available.
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Market size
The Indian electronics and hardware industry is predicted to reach US$ 112-130 billion by 2018 by The Associated Chambers of Commerce of India (ASSOCHAM) and EY, as electronics and hardware manufacturers looking to expand their manufacturing base in India to serve the domestic market as well as the Middle East, Africa, and SAARC countries.
According to the study report, between 2013 and 2020, the market for mobile devices is predicted to rise at a strong CAGR of 33.4%. As a result, it is anticipated that the percentage of mobile devices in semiconductor revenue will increase from 35.4% in 2013 to 50.7% in 2020. Additionally, the telecommunications sector is anticipated to expand between 2013 and 2020 at a fast CAGR of 26.8%. Over the next seven years, the CAGR for the IT&OA segment is predicted to be 18.2%. Although the consumer electronics market is predicted to expand at a CAGR of 18.8%, its share of global semiconductor sales is predicted to decline from 5.6 percent in 2013 to 3.5 percent in 2020. From 2013 to 2020, the automotive electronics market is projected to expand quickly at a CAGR of 30.5%. As a result, its revenue contribution is anticipated to increase from 3.2% in 2013 to 3.9% in 2020.
Investments / Semiconductor Manufacturing
The Foreign Direct Investment (FDI) in electronic manufacturing has reached an all-time high of Rs 123,000 crore (US$ 18.34 billion) in 2016, up from roughly Rs 11,000 crore (US$ 1.64 billion) in 2014, according to Mr. Ravi Shankar Prasad, Union Minister of Information Technology. This increase is primarily attributable to government reforms and its Make in India initiative.
In the Automatic Route, the Government of India has permitted 100% Foreign Direct Investment (FDI) in the Electronics Systems Design & Manufacturing industry. Data from the Department of Industrial Policy and Promotion (DIPP) shows that between April 2000 and December 2016 the electronics industry attracted FDI of US$1.70 billion.
In the past few years, the government has given the ESDM sector more attention after consulting with the semiconductor silicon industry. Preferential Market Access (PMS), Electronics Manufacturing Clusters (EMC), and Modified Special Incentive Package Scheme are only a few of the initiatives described in the National Electronics policy and the National Telecom policy that have already begun to be implemented (M-SIPS). India could become somewhat self-sufficient in electronics with the development of fabrication capabilities there.
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