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Manufacturing: Semiconductor industry set for 19.7% CAGR to 2026F

Fiinews by Fiinews
January 21, 2023
in Manufacturing
Reading Time: 3 mins read
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Market driven by Rs.76.000cr Semicon programme and increasing adoption of smart devices

India’s Semiconductor Industry is at the growth stage, set for an estimated CAGR of 19.7% from 2022F to 2026F, according to a ResearchAndMarket report on semiconductor industry market size, ecosystem, business life cycle and value chain, growth trends and developments among other aspects.

The market size is expected to grow at a five-year CAGR of ~20% by 2027, the “India Semiconductor Market Outlook to 2027” report said on 18 Jan 2023.

With the growing demand by end user industries such as industrial machinery, automobiles, telecommunication equipment, office automation, among others, for computing purposes is expected to accelerate the growth of the semiconductor market in the coming years.

With internet penetration expected to reach 900 million users in the next few years from 622 million users in 2020, there will be an increasing adoption of smart devices, hence, contributing to the semiconductor market growth.

The Rs.76.000 crore Semicon India programme for the development of semiconductor and display manufacturing ecosystem in India is set to drive the strong double-digit growth as India wants to be self-sufficient in electronics and semiconductors market.

There are many design centres in India. All the global companies design their chips in India and they take the prototypes and send it to respective base countries or Taiwan for manufacturing.

Though India has an advantage of designing chips, the research & development (R&D) focus is weak and faces prohibitive costs of acquiring intellectual property (IP) as well as limited start-up capital that have inhibited the potential of local design houses.

For now, the semiconductor industry is 100% dependent on imports from China, Taiwan, the USA, Japan among others, said the report.

Advances in semiconductor technology have increased the functionality and performance of semiconductors, improved their features and power consumption characteristics while reduced their size and cost.

Demand for intrinsic and extrinsic semiconductors is the same in India. Extrinsic semiconductors are used in transistors, bipolar transistors and field-effect transistors. Silicon and germanium are examples of intrinsic semiconductors.

The Southern Region of India dominates the Semiconductor Manufacturing Market. Majority of the manufacturing companies and their plants are located in states like Karnataka, Andhra Pradesh and Telangana.

Currently, there are no centres for design or research and development in the Eastern Region of India, according to the report.

Semiconductors are used in microchips which are used in electronics devices such as the computer, mobile etc. All types of transistors are used in building blocks of logic gates.

The use of semiconductors is majorly in mobile phone devices and constitute the highest market share.

Offline distribution channel dominates the market with more than 90% of the market share. Online distribution channel is new and has not been picked up yet in India.

There are distributors who are selling the product from Singapore or Hong Kong. There are regional distributors who are selling the product from within India. International distributors dominate the market with the highest market share.

Globally, there are ~100 brands of semiconductors, 5,000 design companies and 100 fabs to manufacture, out of which ~20 fabs carry out 80% of the task. The main player being Taiwan Semiconductor Manufacturing Company. Currently, most of the manufacturing processes are carried out in China and Taiwan.

The report has looked at the following semiconductor companies: TSMC, NXP, Broadcom, Samsung, Moschip, Texas Instruments and Saankhya Labs. fiinews.com

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Fiinews.com features through news articles on business opportunities in the Indian market for the benefits of foreigners. It is also a platform for international businesses to showcase through elaborate articles on their products & services to the Indian consumers and corporations exploiting industrialisation of the country.

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It is led by editor-in-chief Gurdip Singh who has worked over 45 years reporting on
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