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Semiconductor

The semiconductor industry has experienced significant growth in recent decades and is forecasted to continue growing steadily. The global market for semiconductors grew from $139 billion in 2001 to over $500 billion currently, representing a compound annual growth rate of around 7%. However, countries' shares of the global semiconductor market have shifted over time. While the US once dominated with over 50% share, its share declined in the 1980s due to competition and issues, though it has since regained its leading position. Meanwhile, Asia's share, led by China, has grown substantially and now accounts for over half of the global market. India aims to become more self-sufficient in semiconductor manufacturing through its India Semiconductor Mission and $10 billion investment

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32 views

Semiconductor

The semiconductor industry has experienced significant growth in recent decades and is forecasted to continue growing steadily. The global market for semiconductors grew from $139 billion in 2001 to over $500 billion currently, representing a compound annual growth rate of around 7%. However, countries' shares of the global semiconductor market have shifted over time. While the US once dominated with over 50% share, its share declined in the 1980s due to competition and issues, though it has since regained its leading position. Meanwhile, Asia's share, led by China, has grown substantially and now accounts for over half of the global market. India aims to become more self-sufficient in semiconductor manufacturing through its India Semiconductor Mission and $10 billion investment

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rijuroy1812
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© © All Rights Reserved
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● As the impact of digital on lives and businesses has accelerated, semiconductor

markets have boomed, with sales growing by more than 20 percent to about
$600 billion in 2021.(mckinsey,2023)
● McKinsey analysis based on a range of macroeconomic assumptions suggests
the industry’s aggregate annual growth could average from 6 to 8 percent a year
up to 2030.(mckinsey,2023)
● Worldwide semiconductor sales increased from $139.0 billion in 2001 to $574.0
billion in 2022, a compound annual growth rate of 6.67 percent per year.
According to the World Semiconductor Trade Statistics (WSTS) Fall 2022
Semiconductor Industry Forecast, worldwide semiconductor industry sales are
forecasted to decrease to $556 billion in 2023 and increase to $602 billion in
2024.(semiconductor.org,2023)

● The U.S. semiconductor industry experienced a significant loss in global


market share during the 1980s. In the early 1980s, U.S.- based producers held
more than 50 percent of worldwide semiconductor sales. Due to intense
competition from Japan- based firms, the effect of illegal "dumping“, as well as
a severe industry recession in 1985 to 1986, the U.S. industry lost a total of
nineteen worldwide market share points.(semiconductor.org,2023)
● The U.S. industry rebounded over the next 10 years, and by 1997, it had
regained its leadership position with over 50 percent global market share, a
position the industry continues to hold today.(semiconductor.org,2023)

● In 2001, the Asia Pacific market surpassed all other regional markets in sales, as
electronic equipment production shifted to the region. It has multiplied in size
since then, from $39.8 billion to over $330.94 billion in 2022. By far, the
largest country market in the Asia Pacific region is China, which accounted for
55 percent of the Asia Pacific market and 31 percent of the total global
market.(semiconductor.org,2023)
● The Indian semiconductor market was valued at approximately $23.2 Bn
and is projected to reach $80.3 Bn by 2028, growing at a compound
annual growth rate (CAGR) of 17.10% during the forecast period.
(investindia.gov.in,2023)
● Further, to support semiconductor research and development (R&D) in
India, the Ministry of Electronics and IT (MeitY) has announced a $10
Bn investment in the India Semiconductor Mission (ISM),demonstrating
the government’s intention to establish a foothold in the semiconductor
market. (investindia.gov.in,2023)
● India exported US$ 160 Mn in Semiconductor Devices in 2021, Sales of
semiconductors from India decreased by 54% in value terms compared
to 2021, making it the 19th largest exporter of Semiconductor Devices in
the world, while India imported US$ 2.17 Bn in 2021 as sales of the
commodity to India decreased by 32% in value terms compared to 2021,
becoming the 9th largest importer of Semiconductor Devices in the
world.(maximizemarketresearch.com,2023)
● In 2022, semiconductor scarcity was felt all across the globe, including
India. This is why the country opted to become self-sufficient in
semiconductor chip manufacturing so swiftly, allocated US$ 10 billion in
production-related incentives (PLI). Over the next six years, the goal is
to establish over 20 semiconductor design, component production, and
display fabrication units in India.(maximizemarketresearch.com,2023)

● The geopolitics of the semiconductor supply chain has undergone a rapid shift
with the introduction of export-control measures by the United States.
Semiconductors were not initially entangled with the larger issues driving the
U.S.-China trade war.Outcomes that may result from the export-control
measures include a stoking of China’s efforts to wean itself off the U.S.-
controlled chokepoints in the supply chain.(carnegie india.org,2023)
● Given the geopolitical nature of the U.S.-China battle to secure key
chokepoints in the semiconductor supply chain, semiconductor companies will
be looking to reconcile these different outcomes to ensure that their supply
chains do not have to be significantly recalibrated.(carnegie india.org,2023)
● In the long term, India is likely to introduce policies that help attract some
semiconductor manufacturing and design capabilities to the country, especially
if the hollowing of China’s semiconductor industrial base continues to take
place. (carnegie india.org,2023)
● Semiconductor companies have experienced supply disruptions in the past,
such as the 2011 Fukushima earthquake, tsunami, and subsequent nuclear
disaster and flooding later that year, COVID-19 has had many more lasting
impacts than these singular traumatic events (Raskob, 2020). According to
various economic analysts, the total losses faced by the automotive sector
worldwide due to semiconductor shortages from the COVID-19 pandemic
totaled $61B in 2021 with some citing totals of $210B.
(digitalcollections.sit.edu,2023)

Semiconductor Mission of India


● India Semiconductor Mission (ISM) is a specialized and independent Business
Division within the Digital India Corporation that aims to build a vibrant
semiconductor and display ecosystem to enable India’s emergence as a global
hub for electronics manufacturing and design.(ism.gov.in,2023)
● The vision of ISM is to build a vibrant semiconductor and display design and
innovation ecosystem to enable India’s emergence as a global hub for
electronics manufacturing and design in a more structured, focused, and
comprehensive manner through various mechanisms.(ism.gov.in,2023)
● Enabling a multi-fold growth of Indian semiconductor design industry by
providing requisite support in the form of Electronic Design Automation
(EDA) tools, foundry services and other suitable mechanisms for early-stage
start-ups.(ism.gov.in,2023)
● Promoting indigenous Intellectual Property (IP) generation and
encouraging,enabling and incentivizing Transfer of Technologies (ToT).
(ism.gov.in,2023)
Objectives (ism.gov.in,2023)
● Formulation of a comprehensive long-term strategy for developing
semiconductors & display manufacturing facilities and semiconductor design
ecosystem in the country in consultation with Government ministries /
departments / agencies, industry, and academia.
● Facilitation in the adoption of trusted electronics through secure
semiconductors and display supply chain, including raw materials, specialty
chemicals, gases, and manufacturing equipment.
● Enabling a multi-fold growth of Indian semiconductor design industry by
providing requisite support in the form of Electronic Design Automation
(EDA) tools, foundry services and other suitable mechanisms for early-stage
start-ups.
● Promoting indigenous Intellectual Property (IP) generation and encouraging,
enabling and incentivizing Transfer of Technologies (ToT).
● Enabling collaborations and partnership programs with national and
international agencies, industries and institutions for catalyzing collaborative
research, commercialization and skill development.

Government Schemes (pib.gov.in,2022)


India Semiconductor Mission (ISM) has been set up as an Independent
Business Division within Digital India Corporation having administrative and
financial autonomy to formulate and drive India’s long term strategies for
developing semiconductors and display manufacturing facilities and
semiconductor design ecosystem.The total fiscal outlay of the proposed
schemes is INR 76,000 crore which is fungible across different schemes.
➢ Scheme for setting up of Semiconductor Fabs in India provides
fiscal support to eligible applicants for setting up of Semiconductor Fabs
which is aimed at attracting large investments for setting up
semiconductor wafer fabrication facilities in the country. Following fiscal
support has been approved under the scheme:
● 28nm or Lower - Up to 50% of the Project Cost
● Above 28 nm to 45nm - Up to 40% of the Project Cost
● Above 45 nm to 65nm - Up to 30% of the Project Cost
➢ Scheme for setting up of Display Fabs in India provides fiscal
support to eligible applicants for setting up of Display Fabs which is
aimed at attracting large investments for setting up TFT LCD /
AMOLED based display fabrication facilities in the country. The
Scheme provides fiscal support of up to 50% of Project Cost subject to
a ceiling of INR 12,000 crore per Fab.
➢ Scheme for setting up of Compound Semiconductors / Silicon
Photonics / Sensors Fab and Semiconductor Assembly, Testing,
Marking and Packaging (ATMP) / OSAT facilities in India: The
Scheme provides a fiscal support of 30% of the Capital Expenditure to
the eligible applicants for setting up of Compound Semiconductors /
Silicon Photonics (SiPh) / Sensors (including MEMS) Fab and
Semiconductor ATMP / OSAT facilities in India.
➢ Design Linked Incentive (DLI) Scheme offers financial incentives,
design infrastructure support across various stages of development and
deployment of semiconductor design for Integrated Circuits (ICs),
Chipsets, System on Chips (SoCs), Systems & IP Cores and
semiconductor linked design. The scheme provides “Product Design
Linked Incentive” of up to 50% of the eligible expenditure subject to a
ceiling of ₹15 Crore per application and “Deployment Linked
Incentive” of 6% to 4% of net sales turnover over 5 years subject to a
ceiling of ₹30 Crore per application.

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