From smartphones to planes, semiconductors are present in everything that make our lives modern. No wonder then this industry is anticipated to grow to $1 trillion in revenues by 2030, a recent report by Deloitte said.
While the US was a leader in the 1960s, competition from other countries increased as commercial demand rose. The US, Europe, Japan, China and Taiwan now dominate the sector. Despite the challenges, companies were able to work together and cater to the ever-growing demand for electronic goods.
Two events have disrupted the order – China’s “Made in China 2025” policy push and the Covid-19 pandemic. The Chinese government has been increasing investments in this sector, and the West, especially the US, fears that the Asian giant will overtake them in the sector. They have applied sanctions, hoping that it would halt China’s march. The pandemic exposed the fragility of the globalised supply chain as lockdowns affected the movement of goods.
These events prompted companies to shift operations out of China, either closer home or to other friendly countries. This presents a good opportunity for India, seeing that it missed the bus in 2007.
The semiconductor business is both capital and labour intensive and the Modi government is helping the sector grow. Not a day goes by without news of a semiconductor major talking about setting up a plant in India. Recently, Union Minister Ashwini Vaishnaw said that India’s first semiconductor fab will be announced soon and that the country is set to have a vibrant chip industry in 3-4 years.
Though this is a good first step, India is just at the start line while others are far ahead in the race. The government must also look at ways to make domestic companies global players.