“Semiconductor Superpower”

India’s Road to Tech Self-Reliance and Market Gains

The global semiconductor industry, a critical pillar of technological advancement, has recently seen significant shifts, offering emerging markets like India a vital opportunity to carve their place. The Taiwan Semiconductor Manufacturing Company (TSMC) serves as a benchmark for the rise of semiconductor giants, and its story is a compelling example of how India can harness the lessons learned to strengthen its position. TSMC’s early limitations, such as a lack of in-house capabilities, did not deter its ambitions, and by the late 1990s, it had transformed into a world-class player. What set TSMC apart was its emphasis on collaboration with international suppliers and its long-term vision of meeting global demand for cutting-edge silicon chips.

For India, this global scenario brings unique prospects. The country’s recent initiatives, like the India Semiconductor Mission (ISM), aim to address the growing demand for integrated circuits (ICs) and chip fabrication.
The ISM is designed to:

• Boost the domestic semiconductor ecosystem by encouraging investments.
• Support research and development (R&D) in the semiconductor field.
• Foster home-grown companies capable of producing semiconductor components across various stages of the value chain.

As global supply chains evolve , India has a strategic opportunity to position itself as a hub for semiconductor production and innovation.

The ongoing geopolitical tensions between the U.S. and China have further accelerated the need for diversified semiconductor sources. With nations like the U.S. “friendshoring” their manufacturing capacities to more politically stable regions, India has emerged as a potential nearshoring destination for companies seeking alternatives to East Asian production hubs. Furthermore, the recent U.S. CHIPS Act 2022 provides an additional incentive for firms to explore manufacturing partnerships beyond traditional players like China and Taiwan.

India’s ambition for self-reliance, however, must be matched with actionable steps.
Access to cutting-edge technology is crucial, including:

• Electronic Design Automation (EDA) tools.
• Graphics Processing Units (GPUs) for advanced chip design.

The government’s Production-Linked Incentives (PLIs) aim to:

• Encourage manufacturers specializing in display technologies .
• Support semiconductor fabrication projects in India.

Significant investments in research facilities are necessary, such as:

• The Indian Institute of Science (IISc) .
• The Centre for Development of Advanced Computing (C-DAC)

These investments are essential for fostering innovation across the semiconductor value chain, from design to final assembly.

For investors, the semiconductor push presents a wealth of opportunities in capital markets. Companies involved in semiconductor production and related technologies are likely to witness substantial growth in the coming years.

• Tata-PSMC
• Keynes Technologies Ltd.
• CG Power

These companies have started their quest in semicon industry with installing fab plants in the country. The Indian government’s focus on reducing import dependencies and fostering domestic production could benefit companies directly involved in the semiconductor supply chain. Investors would do well to monitor developments in this sector, particularly those linked to companies working on display fabs, GPU chips, and System-on-Chip (SoC) technologies, as these are expected to see heightened demand.

The India’s emerging semiconductor ecosystem must also focus on managing project-related risks. As upcoming fab plants transition to advanced nodes, they are expected to encounter challenges related to chip yield.

In conclusion, India’s semiconductor industry is not just a technological ambition—it holds transformative potential for the country’s economic and financial landscape. As India strengthens its semiconductor capabilities, the ripple effects will be felt across various industries, including computing, telecommunications, and consumer electronics. For investors, staying attuned to these developments could unlock new opportunities in India’s evolving financial markets.

Some important terms to understand

1. Integrated Circuits (IC): Integrated Circuit (IC), is a small piece of silicon that contains electronic circuits.
2. EDA Tools: A category of hardware, software, and services that help design, test, and manufacture electronic systems. EDA is also known as electronic computer-aided design (ECAD).
3. GPUs: Chips that handle graphics in games and speed up tasks like video processing and AI.

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