AI boom drives increased demand for semiconductors: Industry leaders

India aims to lead the semiconductor industry by leveraging geopolitical advantage, skilled talent, and cost competitiveness, driving economic growth, say tech executives and officials

There is a growing significance of semiconductors, particularly driven by the rise of artificial intelligence (AI) and technologies like ChatGPT, according to industry leaders at the Nano Electronics Roadshow and Conference, hosted at the Indian Institute of Science (IISc) in Bengaluru.

 

They observed a sharp uptick in semiconductor consumption, with expectations for substantial growth moving forward. The leaders emphasized that India is uniquely positioned to capitalize on this opportunity, offering advantages such as a favorable geopolitical landscape, a skilled talent pool and cost competitiveness—all of which could drive economic security and job creation.

 

“Semiconductor is the new oil,” said Utpal Shah, Senior Vice President of Tata Electronics. "With the advent of AI and ChatGPT, the importance of semiconductors has gone up. It’s truly a hockey stick growth in terms of semiconductor consumption across all aspects of life, and this is only expected to grow substantially moving forward."

 

Shah highlighted the critical role of the semiconductor industry in driving both economic security and job creation. He pointed to examples like Taiwan, where semiconductor output contributes 25 per cent to GDP (gross domestic product), and the U.S., where the industry plays a significant role in economic growth.

 

Shah also explained the broader strategic importance of semiconductors for defence and digital infrastructure. He emphasized that if India aims to become the third-largest economy and fulfill the vision of "Vikshit Bharat 2047," semiconductor development is crucial.

 

Tata Electronics, is investing a total of $14 billion to build India's first semiconductor fabrication facility in Gujarat state and a chip-assembly and testing facility in the state of Assam.

$110 billion market

India’s semiconductor demand, currently at $45-50 billion, is expected to reach $100-110 billion by 2030, according to S. Krishnan, Secretary of the Ministry of Electronics & IT (MeitY).He highlighted the critical role of MeitY’s Nano Centers in fostering innovation and talent development to build a semiconductor-ready workforce of 85,000 professionals. “A key focus of the ministry is aligning various efforts to advance the India Semiconductor Mission, one of the world’s most extensive subsidy and grant programs. With nearly 70-75 per cent of investments in major semiconductor facilities coming from taxpayer money, every Indian is a stakeholder in this mission,” said Krishnan. “Infact, 20 per cen of the workforce in semiconductor design is in India. Ensuring its success is a collective responsibility shared by the government, industry, and academia.” 

 

Abhishek Singh, Additional Secretary, MeitY, highlighted the importance of sensors in the development of AI applications, particularly in fields such as healthcare and agriculture. 

 

“Under the India AI mission, through the INUP (Indian nanoelectronics users program) and other initiatives, startups, entrepreneurs, and researchers are solving real-world problems, driving India to the forefront of cutting-edge technology,” said Singh. “Together, with the pioneering efforts of institutions like IISc, IIT Bombay, IIT Delhi, and others, we are building an ecosystem that ensures India remains a leader in this revolution."

 

Nanoelectronics plays a pivotal role in making these sensors smaller, cheaper, and more capable of performing multiple functions. Singh pointed out how nanoelectronics has made devices significantly smaller yet vastly more powerful. For instance, the fact that there are 20 billion transistors in a single smartphone shows just how much technology has shrunk—down to a scale smaller than a human hair. This shrinking has paved the way for advancements in supercomputing, quantum computing, and AI.

Tech, talent, capital

Regarding Tata Electronics' entry into the semiconductor industry, Shah of Tata Electronics described three key pillars for success: technology, talent, and capital. He acknowledged that while India has abundant talent and pockets of advanced technology, it lacks a fully integrated commercial-grade semiconductor technology. However, Tata Electronics has partnered with a Taiwanese technology provider to acquire initial technology and is focused on developing indigenous commercial-grade solutions over time.

 

On the capital front, Shah expressed appreciation for the government's aggressive and comprehensive semiconductor policy, which has been instrumental in advancing Tata Electronics' efforts. The company has benefited significantly from the support provided by the government, enabling progress in the industry.

 

Shah also highlighted India’s favorable market conditions, noting that local semiconductor consumption is expected to grow substantially by 2030. He pointed out India's favorable geopolitical position, cost competitiveness, and environmental sustainability as additional advantages. 

 

“Many customers have knocked our doors and said, if you have this solution, we would like to have the manufacturing footprint in India, because they see India as a geopolitically favorable region,” said Shah. “Cost competitiveness is another factor that will come into play, as we are building this industry in India. It  will be one of the biggest selling points of India 10 years from now.”

 

Since its founding in May 2020, Tata Electronics has made significant strides. The company has established multiple lines of business, including design services, chip manufacturing (foundry), packaging (OSAT), and system-level manufacturing (EMS). Shah, outlined the company’s ambitious plans in India’s semiconductor industry.He highlighted the establishment of India’s first commercial 12-inch semiconductor fab in Gujarat. Tata’s upcoming fab would reportedly have a capacity of 50,000 wafers per month, and produce 3 billion chips every year.