Only 9% of India's semiconductor needs fulfilled locally in 2021: IESA

The Indian semiconductor market was valued at $27 billion in 2021 and is expected to grow at a healthy CAGR of 16% from 2019 to 2026 to reach $64 billion in 2026, says IESA report

Only 9 per cent of India’s semiconductor requirements were sourced locally last year, according to a report by the industry body Indian Electronic and Semiconductors Association (IESA). 

However, the government’s ‘Make in India’ and product-linked incentive (PLI) policies for semiconductors are expected to be a game-changer for the space, driving local sourcing further and local procurement will grow by over 17 per cent by 2026. According to the report, some of the primary growth drivers include accelerated digitisation, dependence on complex electronic systems to process vast amounts of data, and the increasing use of technologies like artificial intelligence (AI). 

The Indian semiconductor market was valued at $27 billion in 2021 and is expected to grow at a healthy CAGR of 16 per cent from 2019 to 2026 to reach $64 billion in 2026, representing 22 per cent of the total end-equipment revenues, according to IESA.

Furthermore, the report also highlighted that 80 per cent of the total revenue in the Indian semiconductor industry stemmed from mobile phones, smart wearables, IT, and other industrial components. Additionally, with the telecom industry preparing to rollout 5G technology by deploying cloud networks, the demand for semiconductors is expected to skyrocket. 

The telecom market in India, which is in the process of preparing for the 5G rollout, deploying cloud network functionality, and expansion of network coverage, is also expected to bring about a surge in demand for semiconductors. The present valuation of the semiconductor market for the telecom segment is more than $2 billion and it is expected to grow at a CAGR of 34 per cent for the period 2021-2026.

The report also said that the semiconductor demand is boosting the auto industry and will give a fillip to the electric vehicle segment. “The industry, comprising commercial and passenger vehicles, ranks fifth largest in the world. It is expected to become third-largest by volume by 2026 after China and the US. Ongoing efforts to embrace cleaner and greener vehicles will provide an impetus to the automobile industry to adopt advanced technologies,” it added.

India has the potential to become a significant supplier to the global semiconductor manufacturing supply chain across the semiconductor equipment ecosystem, said the report. “There is a potential opportunity for India to serve up to $85 billion – $100 billion of the  $550 billion - $600 billion annual global opportunity by 2030. This is nearly 17 per cent of the global market requirement,” the IESA said.

According to the industry body, India’s potential to cater to the global semiconductor manufacturing supply chain complements its vision to reach $1 trillion in export value by 2030. The semiconductor industry-led exports could well be another important sector for the government in its vision to scale up exports and contribute to nearly 10 per cent of the export outlook by 2030.