Markets

Outlook bright for semiconductor industry as pandemic drives demand

KV Kurmanath Hyderabad | Updated on April 16, 2021

Sector pins hopes on production-linked incentive for development of ecosystem

With the Covid-19 pandemic driving up the demand for electronic devices, the electronics and semiconductor industry in the country anticipates the outlook to remain bright in the current financial year. With the PLI (Production Linked Incentive) scheme providing customised incentives for semiconductor players, a big boost is expected for chip-manufacturing and electronic component and equipment manufacturing in the country.

The Indian Electronics and Semiconductor Association (IESA) expects a huge growth in the financial year as the demand for electronics devices and digital services has gone up since the onset of the pandemic. After initial hiccups last year due to the pandemic, the industry saw a spurt in demand because of the enhanced interest in devices for work and entertainment. “The outlook is bright for 2021-22 as the requirement for electronics is not going to come down,” Rajeev Khushu, Chairman of IESA, told BusinessLine.

Global realignment

The semiconductor industry is at an interesting phase globally. “Several countries have announced policies to boost the industry in their respective countries. . “We have now many countries competing with us. The biggest challenge we are facing is a fierce competition from the US, Europe and China,” he said.

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A lot of realignment is happening globally in the semiconductor space. “It makes sense for us to push manufacturing in India, where a lot of design work is happening,” he said. With a lot of US-based companies running their captive design houses in India, it makes sense for that country to invest in manufacturing here, he said.

With a growth rate of 30 per cent, the electronics production industry in India hopes to be at $410 billion by 2025, which will be 8.2 per cent of the GDP as against 3.2 per cent now. In a recent report, prepared with Frost & Sullivan, IESA said that the Electronics System Market will grow to 2.3 times of its current size to reach $160 billion by 2025.

PLI scheme hailed

Khushu said the PLI scheme could help evolve an electronics manufacturing ecosystem in the country. “We have become the second biggest mobile manufacturer in the world. We can repeat this success in the manufacturing of servers, tablets and colour TVs. The PLI scheme is going to drive this space,” he said.

He said arrival of a global player in the Assembly Test Mark and Pack (ATMP) operations would go a long way in developing an electronics manufacturing ecosystem in the country.“This space provides three times more jobs compared to the chip-fabrication space. Attracting the manpower-intensive ATMP players will be the logical step for India,” he said.

Published on April 16, 2021

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