The global semiconductor industry is the backbone of today’s digital economy, powering everything from smartphones and laptops to electric vehicles and advanced medical devices. As the demand for semiconductors skyrockets, particularly in the wake of global disruptions such as the COVID-19 pandemic and geopolitical tensions, nations worldwide focus on strengthening their semiconductor manufacturing capabilities. India, with its massive market potential and growing technical expertise, is now stepping into this critical arena.
This blog explores the history of semiconductor manufacturing globally, the pivotal role of Taiwan, and India’s evolving position in this sector, with special attention to Prime Minister Narendra Modi’s strategic interest in turning India into a semiconductor hub.
A Brief History of Semiconductor Manufacturing
The semiconductor industry traces its origins back to the mid-20th century when the first transistors were developed in the late 1940s. These tiny switches formed the building blocks for all modern electronics, leading to the development of integrated circuits (ICs) in the 1960s. Semiconductor technology evolved exponentially over the next few decades, enabling rapid advancements in computing, telecommunications, and consumer electronics.
By the 1980s, semiconductor manufacturing became a global industry, dominated by the United States, Japan, and South Korea. American companies like Intel, AMD, and Texas Instruments were pioneering chip designs, while Japan’s Sony and Toshiba were making waves in consumer electronics. South Korea’s Samsung and SK Hynix soon entered the market, establishing themselves as global leaders in memory chips.
However, one country that rose to particular prominence in semiconductor manufacturing was Taiwan.
Taiwan’s Critical Role in the Semiconductor Industry
Taiwan is the undisputed global leader in semiconductor manufacturing, with its company, Taiwan Semiconductor Manufacturing Company (TSMC), at the forefront. TSMC was founded in 1987, and today, it manufactures around 60% of the world’s semiconductors and nearly 90% of advanced chips. TSMC’s dominance lies in its advanced manufacturing processes and ability to mass-produce cutting-edge semiconductors at nanometer scales, which are essential for high-performance devices such as smartphones and AI-driven applications.
Taiwan’s stronghold in the industry makes it a key player in global geopolitics, with countries like the U.S., China, and Japan relying on Taiwanese chips for their technological ecosystems. As semiconductor shortages hit global supply chains in recent years, the world has realized the importance of diversifying production beyond Taiwan, prompting several nations to invest in domestic manufacturing.
This global shift presents a timely opportunity for India.
India’s Semiconductor Landscape: Challenges and Opportunities
For years, India has been recognized for its robust IT services industry, but semiconductor manufacturing has largely remained underdeveloped. Several factors contributed to this, including the high costs of setting up semiconductor fabrication (fab) plants, inadequate infrastructure, and the complexity of the global semiconductor supply chain.
Despite these challenges, the Indian government is now making bold moves to establish India as a key player in this sector.
Prime Minister Narendra Modi’s administration has taken a proactive stance, recognizing the strategic importance of semiconductors in driving the nation’s digital economy and securing its technological future. India’s ambition is to become a self-reliant semiconductor hub, reducing dependency on global supply chains and fostering innovation within its borders.
Government Initiatives and Prime Minister Modi’s Vision
Under the leadership of PM Modi, the Indian government has rolled out several initiatives aimed at boosting semiconductor manufacturing:
1. Production Linked Incentive (PLI) Scheme: The Indian government introduced the PLI scheme to provide financial incentives for companies investing in semiconductor manufacturing. The scheme covers the entire semiconductor ecosystem, including design, production, and assembly, and offers subsidies for setting up fabs.
2. Semiconductor Mission: In 2021, the government launched the India Semiconductor Mission (ISM), a comprehensive program that aims to build a robust semiconductor and display manufacturing ecosystem. The ISM will focus on building fabs, chip design houses, and the necessary infrastructure to support large-scale manufacturing.
3. Global Partnerships: Recognizing the complexity of semiconductor manufacturing, India has sought partnerships with global players. Recently, the Indian government signed Memorandums of Understanding (MoUs) with leading companies like Intel, TSMC, and Foxconn to explore setting up fabs in India. These collaborations will help India acquire cutting-edge technology and expertise.
4. Infrastructure Development: A key component of semiconductor manufacturing is access to reliable infrastructure, particularly in terms of power and water supply. To support fabs, the government has been working on improving infrastructure in key regions like Gujarat, Karnataka, and Uttar Pradesh (particularly the Noida area), positioning these states as future semiconductor hubs.
Noida: A Rising Semiconductor Hub
The Noida area, part of the National Capital Region (NCR), is emerging as one of India’s key locations for semiconductor manufacturing. With its proximity to world-class infrastructure, a robust talent pool, and easy access to international markets, Noida is poised to attract global and domestic investment in the semiconductor sector.
Several global companies have expressed interest in setting up manufacturing units in Noida, and recent developments suggest that the region will play a critical role in India’s semiconductor journey. Additionally, the area’s established electronics manufacturing ecosystem, with companies like Samsung and Vivo operating large facilities, provides a solid foundation for growth in semiconductor production.
India’s Future as a Semiconductor Powerhouse
The journey ahead for India’s semiconductor manufacturing sector is challenging but filled with promise. With global semiconductor demand projected to reach $1 trillion by 2030, India is uniquely positioned to capture a share of this growing market. By building domestic manufacturing capabilities, the country can not only reduce its reliance on imports but also create millions of high-skilled jobs, foster innovation, and ensure technological sovereignty.
Prime Minister Modi’s strategic interest in the sector signals India’s seriousness about becoming a global semiconductor player. His vision aligns with the broader goal of making India a $5 trillion economy by 2025, where high-tech manufacturing will play a crucial role.
The semiconductor industry is at the heart of the global digital economy, and as the world looks to diversify its supply chains, India stands at the threshold of a new era. With strong government support, strategic partnerships, and investments in infrastructure, India has the potential to become a key player in semiconductor manufacturing. The future of India’s semiconductor journey is bright, with Noida and other regions leading the way.
As the country continues to strengthen its position in the global semiconductor value chain, we can expect India to play a critical role in shaping the future of technology worldwide.
— Gunjan Shree