By Dilip Sawhney

The global semiconductor landscape is transforming, accelerated by the supply chain disruptions that followed the COVID-19 pandemic and escalating global geopolitical concerns. Industries such as automotive, consumer electronics, and the high-tech sector bore the brunt of post-pandemic chip shortages – particularly in countries like India where domestic semiconductor manufacturing has historically been limited. To date, India’s USD 24 billion demand for semiconductors is almost entirely reliant on imports. 

The opportunity for India is enormous. By developing a cutting-edge fabrication and chip manufacturing ecosystem, the country can reduce its reliance on imports and position itself as a crucial player in the global semiconductor supply chain. This high-value export not only boosts GDP but also enhances India’s integration into global value chains (GVCs), driving economic growth and innovation. A strong semiconductor industry will attract related businesses and research institutions, fostering a dynamic innovation ecosystem that benefits the broader economy.

L&T’s Energy CarbonLite Solutions vertical bags LNTP for thermal power plants in Madhya Pradesh, Bihar

Cornerstone Ventures eyes investments in SaaS segment

Nifty 50 firms’ earnings may slip to 5-year low

As AI evolves, IT firms see slowdown in mega deals

As per the estimate by the Ministry for Information Technology, the Indian semiconductor sector to surpass $100 billion in valuation by 2030. Aligned to this vision, the Union Cabinet approved a US$394.15 million investment to establish a semiconductor manufacturing unit in Gujarat. This was the fifth such facility announced under the India Semiconductor Mission (ISM), bringing total investments in the sector to ₹1,52,307 crore (US$18.15 billion). These recent investments highlight India’s drive to become a global semiconductor hub, boosting innovation, research, and employment.

The government’s policies show the urgency to push domestic production. Initiatives such as the production-linked incentive (PLI) and design-linked incentive (DLI) schemes, alongside tax breaks and eased regulations, are major boosts to manufacturers. The government has also launched a scheme to establish semiconductor ‘fabs’, aiming to strengthen the country’s electronics manufacturing ecosystem and build a reliable semiconductor value chain. The initiative offers fiscal support of up to 50% of project costs for approved applicants for up to six years, sharing the risk between the government and investors. Targeting companies, consortia, and joint ventures, the scheme focuses on Silicon CMOS-based fabs for producing semiconductor components. 

Addressing challenges beyond investments

For semiconductor manufacturers, sustainability is a key priority and strategic goal. The production process is complex and requires strict environmental control, making the industry highly resource-intensive. With facilities consuming up to five million gallons of ultra-pure water (UPW) daily, efficient access to power and water is essential. To stay profitable and competitive, chip makers must embrace innovative manufacturing solutions that promote cleaner, more energy- and water-efficient operations.

Besides attracting investment, the Indian semiconductor industry faces challenges including technology adoption and the availability of skilled labor. Finding talent, building a supplier ecosystem and ensuring long-term policy stability for continued investments is critical.  India also lags in research and development (R&D), which hampers the means to foster innovation. India’s infrastructure, including raw material availability and specialized equipment, is also underdeveloped. 

In addition, companies need to invest in upskilling and training programs to ensure that their workforce can effectively utilize the latest technologies. Automation and digitization can play a pivotal role in this space too by enabling more efficient and scalable training, helping employees to better leverage their expertise in high-end manufacturing environments. 

Also read: Semiconductor manufacturing – India’s bargaining chip at the global stage!

Embracing smart technologies 

In a competitive landscape, eliminating errors and waste is crucial for profitability. Continuous optimization of product quality, yield, and throughput is essential, and digitalization is key to achieving these goals. Advanced digital solutions enable semiconductor fabs to excel in Statistical Process Control and anomaly detection. 

Given the industry’s unique demands for water and cleanroom conditions, leveraging industrial automation and AI-driven solutions can boost productivity and streamline processes. Additionally, as sustainability becomes a priority for companies worldwide, integrating digital solutions can enhance energy efficiency and reduce waste. By adopting energy-saving practices and minimizing their environmental impact, semiconductor firms can meet regulatory and corporate sustainability targets, positioning themselves as leaders in a responsible industry.

Safeguarding intellectual property, securing supply chains, and protecting digital infrastructure are vital for success in the competitive semiconductor industry. With industrial control systems (ICS) increasingly targeted by cybercriminals and nation-state actors, the risks to manufacturers have grown. As modern fabs become more connected, even small actions can lead to significant disruptions. To manage these challenges, semiconductor organizations need a comprehensive cyber resilience strategy, supported by trusted experts and partners, to ensure security at all stages and build long-term resilience against evolving threats.

Conclusion

Developing a resilient and self-sufficient semiconductor industry is no longer just an ambition—it is a strategic imperative. India’s long-term success in the semiconductor sector will depend on addressing challenges while capitalizing on its existing strengths. Attracting global investments—both financial and technological—is crucial to establishing a strong foothold in the global value chain and enhancing domestic supply chain resilience. Equally important are favourable industry policies, progressive regulations, and a robust innovation and R&D ecosystem.

(The author is Managing Director, Rockwell Automation India. Views are the author’s own and not necessarily those of financialexpress.com.)