Mobile and wearables, IT and industrial segments currently contribute around 80 percent of the semiconductor revenues in India, according to the latest India Semiconductor Market Report, 2019-2026.
The joint research by the India Electronics & Semiconductor Association (IESA) and Counterpoint Research estimates that India’s semiconductor component market will see its cumulative revenues climb to $300 billion during 2021-2026.
In 2021, India’s end equipment market stood at $119 billion in terms of revenue. It is expected to grow at a CAGR of 19 percent from 2021 to 2026.
‘Make in India’ and Production Linked Incentive schemes will boost local sourcing of semi-components in the coming years. Further policy reforms and building of a semiconductor ecosystem will reduce reliance on imports going forward, the research said.
The Electronic System Design and Manufacturing (ESDM) sector in India will play a major role in the country’s overall growth, from sourcing components to design manufacturing.
IESA CEO and president Krishna Moorthy said, “Before the end of this decade, there will be nothing that will not be touched by electronics and the ubiquitous ‘chip’. Be it fighting carbon emissions, renewable energy, food safety, or healthcare, the semiconductor chip will be all-pervasive.”
Moorthy also said chip will make every innovation such as virtual classrooms, remote healthcare diagnostics or telemedicine possible across the length and breadth of the country in the near future.
India is poised to be the second largest market in the world from the perspective of scale and growing demand for semiconductor components across several industries and applications.
Other key findings from the report:
The increasing pace of digital transformation among the country’s consumers, enterprises and public sector through the adoption of new technologies, from advanced connectivity to content consumption to the cloud is driving the demand for chips. These cover smartphones, PCs, wearables, cloud data centers, Industry 4.0 applications, IoT, smart mobility, and advanced telecom and public utility infrastructure.
In the last five years, the ‘consumer digital transformation’ has accelerated with the availability of cheap mobile internet, and mobile devices have connected a big part of the Indian population
The gradual shift from feature phones to smartphones has been generating increased proportions of advanced logic processors, memory, integrated controllers, sensors and other components. This will continue to drive the value of the semiconductor content in smartphones, which is still an under-penetrated segment in India, aided by the rise of wearables such as smartwatch and TWS.
While the next boom will happen across the sectors, telecom sector with the advent of 5G and fiber network rollout will be a key catalyst in boosting the semiconductor components consumption.
Advanced semiconductor-heavy 5G and FTTH network infrastructure equipment will contribute to more than 14 percent of the total semiconductor consumption in 2026.
AI-driven 5G endpoints, from smartphones, tablets, PCs, connected cars and industrial robotics to private networks will also drive the consumption demand.
Ongoing efforts to embrace cleaner and greener vehicles (electric vehicles) will provide an impetus for the automobile industry to adopt advanced technologies, which in turn will boost the demand for semiconductor components in India.
Consumer electronics, industrial, and mobile and wearables will be the other key industries for the growth of the semiconductor market in India. Further, this semiconductor demand will not only be driven by domestic consumption but also by the growing share of exports.
While the country is becoming one of the largest consumers of electronic and semiconductor components, most components are imported, offering limited economic opportunities for the country. Currently, only 9 percent of this semiconductor requirement is met locally.
To help drive more initiatives under the themes of Make in India and Digital India, the government, in its last budget, pushed the total allocation to $936.2 million. This step not only aims to incentivize India-based manufacturing but also catalyze investments in the sector to support job creation, ease of doing business, import reduction and export promotion
IESA vice president Sunil G Acharya said, “Semiconductors will be inside everything intelligent. India is becoming a tech-centered growth story with advancing technologies and innovation being integral to democratizing access. The semiconductor study will play a major role in India’s growth.”
Commenting on the current stage of local manufacturing, Research Analyst at Counterpoint Research Shivani Parashar said, “To achieve India’s semiconductor vision, a robust and indigenous technology ecosystem will be required to build on the existing policy foundation through PLI-like schemes.”
Parashar further said, “Renewed focus is needed for incentivizing the country’s design ecosystem in a manner that helps create a stronger foundation for design-led manufacturing and allied sectors, be it for local consumption or exports. This strategy will transform the landscape in the coming years to drive local sourcing trends.
According to Parashar, the share of local sourcing is expected to grow to over 17 percent by 2026. This translates into a six-fold rise in potential locally-sourced semiconductor revenues.
IESA vice president (Public Policy, Government and Corporate Relations) Anurag Awasthi said, “The government is keen to leverage India’s existing strengths in mobile manufacturing, software and start-up hubs for other critical industries in the ESDM sector.”
