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India's Semiconductor Manufacturing Strategy



  Sep 04, 2023

India's Move into Semiconductor Manufacturing: A Balanced Approach


India's recent entry into semiconductor manufacturing is influenced by a mix of factors that promise positive economic and security outcomes. This strategic path is shaped by a balanced combination of government policies, collaborations with global industry leaders, and a realistic understanding of potential gains and challenges.
 

Guided by Government Policies:

Central to India's push into semiconductor manufacturing is the Production Linked Incentive (PLI) scheme. This policy encourages local manufacturing and research in electronics, including semiconductors. The PLI scheme acts as a catalyst, attracting investments and creating an environment conducive to innovation and advanced technologies.
 

Global Tech Leaders Get Involved:

India's journey into semiconductor manufacturing gathers momentum through partnerships with global technology giants. Companies like Micron Technology and AMD have made significant investments, showcasing India's growing presence in the tech sector.
 
Micron Technology's plan to establish a semiconductor plant in Gujarat is a significant step. Beyond finances, this initiative is expected to create 5,000 jobs, boosting local economies. Similarly, AMD's $400 million investment over five years and the establishment of a large research and development campus in Bengaluru highlight their confidence in India's capabilities.
 

Promising Benefits Ahead:

India's move towards domestic semiconductor manufacturing offers potential advantages in line with broader objectives:
 
Reducing Imports: By establishing local semiconductor fabs, India aims to reduce dependence on imported semiconductors, addressing trade imbalances.
 
Boosting Electronics: Semiconductor manufacturing supports India's goal of strengthening its electronics manufacturing sector, fostering growth and exports.
 
Supply Chain Security: The COVID-19 pandemic exposed supply chain vulnerabilities. Domestic semiconductor production can help mitigate these risks, ensuring stable supplies.
 
Enhancing Security: Producing semiconductors domestically enhances national security by reducing reliance on external sources.
 

Navigating Challenges:

Despite the promise, India faces challenges:
 
Capital Investment: Establishing semiconductor fabs requires significant investment, necessitating strong government support.
 
Holistic Ecosystem: A robust semiconductor industry demands skilled labor, research facilities, and reliable supply chains. India needs to develop this ecosystem.
 
Technical Expertise: Bridging the technology gap is vital for effective competition.
 
Global Competition: India enters the semiconductor landscape amidst global competition.


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