India is poised to be the second-largest market in the world for semiconductors from the perspective of scale and growing demand across several industries and applications.

India’s semiconductor component market will see its cumulative revenue climb to $300 billion during 2021-2026, according to the ‘India Semiconductor Market Report, 2019-2026’, a joint research by the India Electronics & Semiconductor Association (IESA) and Counterpoint Research.

This demand is being pushed by 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. These cover smartphones, personal computers (PCs), wearables, cloud data centers, Industry 4.0 applications, Internet of things (IoT), smart mobility, and advanced telecom and public utility infrastructure, said the report on Tuesday.

Right now, the US is the largest consumer of semiconductor with more than 47 per cent, followed by South Korea with around 20 per cent.

“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. Imagine this – all children all over India get educated in virtual classrooms by the country’s best teachers. The chip makes it possible,” said Krishna Moorthy, Chief Executive Officer and President at IESA.

The report mentioned that in 2021, India’s end equipment market stood at $119 billion, in terms of revenue and it is expected to grow at a compounded annual growth rate of (CAGR) of 19 per cent from 2021 to 2026. 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, it said.

The semiconductor industry in India is on a path to immense growth over the next few years to help India’s economy reach the next stage for both domestic consumption and 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 nine-per cent of this semiconductor requirement is met locally, it said.

It further said that the while the local production is currently low, India has immense potential to become a leading semiconductor component supplier in the coming years, provided the talent pool and resources are utilised correctly. The government’s initiatives, from ‘Make in India’ to Production Linked Incentive (PLI), will help accelerate this journey but will need some additional reforms to increase local manufacturing and sourcing of semiconductor components.

If this is done, the semiconductor market can be a major contributor to economic growth, and India’s push to become a $5-trillion economy.

“The mobile and wearables sector was the biggest contributor to India’s semiconductor industry in 2021. Also, 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,” said Tarun Pathak, Research Director at Counterpoint Research.

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