India Semiconductor Market Outlook to 2028

India Semiconductor Market Overview

The India semiconductor market size by revenue USD 7.50 billion, driven by increased demand across various sectors such as automotive, consumer electronics, and telecommunication. The market's rapid expansion is fueled by government initiatives like the Production Linked Incentive (PLI) scheme aimed at boosting local manufacturing and reducing dependence on imports. Significant growth is also attributed to the proliferation of Internet of Things (Io T) devices, expansion of data centers, and the accelerating demand for electric vehicles, which require advanced semiconductor solutions. This trend will continue as demand for electronic products increases across industries.

The Indian semiconductor market is dominated by southern cities like Bengaluru and Hyderabad, which are known for their robust IT and electronics manufacturing ecosystems. These cities house several multinational corporations, research institutes, and a growing number of semiconductor manufacturing facilities. The dominance of southern India is further reinforced by the availability of skilled talent, government incentives, and the well-developed infrastructure supporting high-tech industries. Additionally, states like Gujarat are emerging as new semiconductor hubs due to state-backed initiatives to attract global investments.

The Indian government has introduced numerous incentives to attract semiconductor manufacturers, including the Semiconductor Manufacturing Incentive (SMI) scheme, which offers up to 50% capital subsidy for new fab plants. These incentives aim to position India as a global semiconductor hub by 2025, creating tens of thousands of jobs and reducing reliance on imports. In addition, the policy provides for long-term tax holidays to foster local innovation and development.

India Semiconductor Market Segmentation

By Product Type: India’s semiconductor market is segmented by product type into memory chips, microprocessors, analog ICs, logic ICs, and discrete semiconductors. Recently, memory chips have dominated the market due to the increasing need for data storage driven by the expansion of cloud computing and data centers. The surge in demand for high-performance computing in various applications, including artificial intelligence (AI) and big data analytics, has contributed to the substantial market share of memory chips.

By Application: The semiconductor market in India is also segmented by application into consumer electronics, automotive, telecommunications, industrial electronics, and healthcare. Consumer electronics is the dominated the market due to the growing penetration of smartphones, laptops, and wearables in India. The affordability and accessibility of these devices have created a massive demand for semiconductors, particularly in integrated circuits and processors. Rising disposable incomes and government initiatives aimed at promoting digital inclusion have further driven this growth.

India Semiconductor Market Competitive Landscape

The Indian semiconductor market is dominated by a few major global and local players. Companies like Intel and Samsung have solidified their presence, taking advantage of India's growing demand for semiconductor solutions in multiple sectors. The local market is seeing a surge of Indian manufacturers partnering with international firms to establish semiconductor manufacturing plants, buoyed by government incentives.

Company

Establishment Year

Headquarters

No. of Employees

Revenue (USD)

Product Range

R&D Investment

Market Presence

Inception Year in India

Intel Corporation

1968

California, USA

Samsung Electronics

1938

Seoul, South Korea

Qualcomm Incorporated

1985

California, USA

Texas Instruments

1930

Texas, USA

NXP Semiconductors

2006

Netherlands

India Semiconductor Industry Analysis

India Semiconductor Market Growth Drivers

Government Policies and PLI Schemes: The Indian government’s Production Linked Incentive (PLI) scheme for semiconductors aims to boost domestic manufacturing, targeting an estimated investment of $10 billion by 2024. The policy includes incentives for manufacturers to set up semiconductor fabs and specialized supply chains. This initiative has catalyzed companies like Vedanta and Foxconn to announce investments in India’s semiconductor ecosystem. Government projections indicate that the policy will generate over 85,000 jobs by 2025. The Ministry of Electronics and Information Technology has been overseeing the expansion of semiconductor research and development capabilities across key regions.

Rising Demand for Io T Devices: With an increasing reliance on Internet of Things (Io T) devices, the demand for semiconductors in India is skyrocketing. By 2024, India is expected to have more than 1.3 billion connected devices, requiring advanced chips for processing and communication. The surge in smart homes, industrial automation, and wearable technology is driving domestic demand. India's Ministry of Communications has set a goal to make the country a global Io T hub, pushing semiconductor production to meet the rising need for Io T chipsets in diverse industries.

Expansion of Data Centers and Cloud Services; India's data center market is expanding rapidly, with projected investments of $6 billion in 2024, driving the need for advanced semiconductor solutions. Cloud services from global giants like Amazon Web Services (AWS) and Google Cloud are experiencing significant growth in India. The rise of AI-driven data processing requires chips with higher computational power, further increasing semiconductor demand. India's IT ministry is facilitating this expansion by ensuring policy frameworks that support energy-efficient, AI-integrated semiconductor technologies for data centers

India Semiconductor Market Restraints

Supply Chain Bottlenecks: India’s semiconductor supply chain continues to face bottlenecks, especially in raw material availability. The global shortage of silicon and other essential materials hampers production timelines. Moreover, a lack of robust domestic suppliers’ forces companies to rely on imports, increasing lead times. The ongoing geopolitical tension in Asia has further strained the supply chain, prompting India to seek strategic alliances for material procurement. The Ministry of Commerce and Industry has emphasized boosting domestic supply chains to reduce dependency.

Shortage of Skilled Workforce: India faces a shortage of skilled labor in semiconductor design and manufacturing, with an estimated 40,000 additional engineers required to meet industry demand by 2025. Despite the presence of over 200 engineering colleges, there’s a gap between academic training and industry needs. The government is working with academic institutions to introduce specialized semiconductor courses. Initiatives by the All-India Council for Technical Education (AICTE) aim to upgrade skills to meet the growing demands of this complex sector.

India Semiconductor Market Future Outlook

Over the next five years, the Indian semiconductor market is expected to witness robust growth driven by continuous government support, growing demand for consumer electronics, and the accelerating shift towards electric vehicles. The roll-out of 5G infrastructure, the expansion of data centers, and the increasing adoption of artificial intelligence will further boost the demand for advanced semiconductor solutions. This growth trajectory is likely to be sustained as international companies increasingly look to India as a manufacturing hub due to favorable policy incentives and a strong talent pool in engineering and technology.

Market Opportunities

Expansion of Semiconductor Foundries: India’s semiconductor ecosystem is witnessing growing interest in establishing foundries. The government’s Semiconductor Mission has led to several Memorandums of Understanding (Mo Us) with global firms, paving the way for new fab plants. With plans to add at least two manufacturing plants by 2025, India aims to become a global hub for semiconductor fabrication. Strategic locations like Gujarat and Karnataka have been identified for these projects, supported by strong government backing and potential international partnerships.

Opportunities from AI and 5G Rollouts: India’s telecom market is one of the fastest-growing globally, and the rollout of 5G will significantly boost semiconductor demand. By the end of 2024, India is expected to have over 500 million 5G connections, with chips designed specifically for high-speed data processing becoming a crucial component. The rise of AI applications in industries like healthcare, education, and smart cities will further fuel demand for semiconductor technologies tailored to these advanced sectors.
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