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India's strategic shift towards mature-node chip manufacturing signifies a calculated move to establish a strong foothold in the global semiconductor landscape. Rather than directly competing in the high-stakes race for cutting-edge technology, India is deliberately focusing on producing chips in the 28nm to 65nm range, a segment experiencing robust demand from critical sectors such as automotive, telecommunications, and industrial electronics. This approach allows India to leverage its existing capabilities and resources effectively, while simultaneously addressing a tangible need in the global supply chain. The decision to prioritize mature-node technology stems from a pragmatic understanding of the current market dynamics. The automotive industry, for example, relies heavily on these chips for various applications, including engine control units (ECUs), infotainment systems, and advanced driver-assistance systems (ADAS). Similarly, the telecommunications sector utilizes mature-node chips in infrastructure components, mobile devices, and networking equipment. The industrial electronics sector also depends on these chips for a wide range of applications, from factory automation to power management. By targeting these sectors, India can ensure a steady demand for its semiconductor output and establish itself as a reliable supplier in a crucial segment of the market. Furthermore, this strategic focus aligns with India's broader economic development goals. The semiconductor industry is a key enabler of innovation and growth across various sectors, and by developing a strong domestic manufacturing base, India can reduce its reliance on imports and enhance its competitiveness in the global market. The government's commitment to supporting the semiconductor industry is evident in the Semicon India Programme, which offers significant incentives to attract manufacturers, establish fabs, and build a local supply chain. This program, coupled with the growing trend of companies seeking to diversify their supply chains away from China (the “China +1” strategy), presents a unique opportunity for India to emerge as a major player in the semiconductor industry.
The analysis by Bastion Research highlights the strategic significance of India's approach, emphasizing that the country is positioning itself to fill a “critical gap” in the global supply chain. While acknowledging the current limitations in advanced semiconductor fabrication, the report underscores the long-term potential of India's mature-node strategy. The comparison to Taiwan and South Korea's semiconductor journey in the 1970s–1990s provides a historical context, suggesting that India is following a similar path towards building a thriving domestic industry. Taiwan and South Korea initially focused on assembly and testing before moving into more advanced manufacturing processes. This phased approach allowed them to develop the necessary skills and infrastructure to compete effectively in the global market. Similarly, India is already gaining ground in system integration, particularly in automotive electronics, telecom, consumer devices, and medical technology. This expertise in system integration provides a solid foundation for developing more advanced semiconductor manufacturing capabilities. The report also emphasizes the importance of India's talent pool and technical capabilities, which are seen as matching global standards. India has a large and skilled workforce, with a growing number of engineers and scientists specializing in semiconductor technology. The country's rapid progress in scaling operations is also a positive sign, indicating that India is capable of quickly ramping up production to meet growing demand. The global “China +1” strategy is another key factor driving India's semiconductor ambitions. Companies are increasingly looking to diversify their supply chains away from China due to geopolitical concerns, trade tensions, and the potential for disruptions caused by events such as pandemics. India offers a viable alternative, with a stable political environment, a large domestic market, and a supportive government. The government's Semicon India Programme, launched in 2021 with Rs 76,000 crore in incentives, is a key element of this strategy. The program aims to attract manufacturers, establish fabs, and build a local supply chain, thereby creating a comprehensive ecosystem for the semiconductor industry.
The recent approvals under the India Semiconductor Mission (ISM) further demonstrate the government's commitment to supporting the industry. The four new projects worth Rs 4,600 crore in Odisha, Andhra Pradesh, and Punjab bring the total ISM portfolio to 10 projects across six states with investments of Rs 1.6 lakh crore. These projects cover a range of activities, including fabrication, assembly, testing, and packaging. Prime Minister Narendra Modi's announcement on Independence Day that India-made semiconductor chips will hit the market by the end of this year reflects the government's confidence in the progress being made. The approval of six semiconductor plants, including the joint venture between the HCL Group and Taiwanese electronics major Foxconn, is a significant milestone. The plant, to be located near Jewar Airport in western Uttar Pradesh, will contribute to the development of a semiconductor manufacturing hub in the region. The other five plants, located in Gujarat and Assam, will further strengthen India's semiconductor ecosystem. The Tata Electronics–PSMC Semiconductor fabrication plant, the CG Power–Renesas–Stars Microelectronics ATMP unit, Micron Technology’s ATMP facility, and the Kaynes Semicon ATMP unit in Gujarat, along with the Tata Semiconductor Assembly and Test (TSAT) unit in Assam, represent a diverse range of activities across the semiconductor value chain. In conclusion, India's strategic focus on mature-node chip manufacturing, coupled with government support and the “China +1” trend, positions the country for significant growth in the semiconductor industry. While challenges remain, including the need for skilled labor, infrastructure development, and a robust supply chain, India's potential to become a major player in the global semiconductor market is undeniable. The coming years will be crucial in determining whether India can successfully execute its ambitious plans and establish itself as a reliable and competitive supplier of semiconductors.
Source: India bets on mature-node chipmaking; China+1 trend boosts manufacturing role: Report