India is making significant strides in the semiconductor industry, aiming to become a major global player. The government has committed substantial investments and launched initiatives like the India Semiconductor Mission (ISM) to boost domestic manufacturing capabilities. While the ambition to produce cutting-edge chips is commendable, experts suggest a pragmatic approach: focus on mastering mature technologies and building a robust foundation before chasing the most advanced nanometer nodes.

The Allure of Chips

The global rush to secure semiconductor supply chains has led India to allocate significant resources to this sector. The government set aside $10 billion in 2022 for new facilities and plans to double that amount. This commitment reflects the understanding that a strong domestic semiconductor industry is vital for economic security and technological autonomy.

India's semiconductor consumption is projected to nearly double to $103.5 billion by 2030, with a CAGR of 13.8%, outpacing global growth benchmarks. This growth is driven by increasing demand for electronics, electric vehicles, 5G rollouts, and the expansion of data centers. The sector is also transitioning from a consumption-heavy market to a global capability hub across design, R&D, and manufacturing enablement.

A Pragmatic Approach

While the ambition to manufacture advanced 5-7 nanometer (nm) chips is present, a more practical approach involves mastering mature technologies first. Focusing on legacy chip production allows India to build a strong foundation, develop a skilled workforce, and ensure a stable supply chain. These chips, while not cutting-edge, are essential for various industries and applications, contributing to economic security and supporting broader manufacturing.

The "Made in India" chips presented to Prime Minister Narendra Modi were developed by a special laboratory that's part of India's space program and designed for harsh conditions. These chips are based on 180-nanometer technologies, similar to those used in Intel Corp.'s Pentium-IIIs. While not the most advanced, they are cheap, functional, and robust, perfectly suited for specific applications.

Building a Talent Pool

India has a significant advantage in its large pool of engineers specializing in software development, cloud solutions, and emerging technologies. The country contributes 20% of the global semiconductor design talent, with over 35,000 engineers engaged in chip design. By 2030, the semiconductor workforce is projected to grow by over 120% to nearly 400,000, making India the world's second-largest semiconductor talent hub after the US.

However, skill gaps remain a challenge. The rapidly evolving technology landscape often outpaces the curriculum of educational institutions, leading to a shortage of specialized skills in areas like AI, machine learning, cybersecurity, and blockchain. To address this, companies are taking it upon themselves to cultivate the skills they need, either by offering training or by removing degree requirements and offering apprenticeships.

Skipping the Tech Dreams?

India's technology sector has seen rapid growth, with revenues reaching $245 billion by 2023. The country has become a hub for Global Capability Centers (GCCs), attracting major tech companies like Amazon and Google. India is also a leading destination for IT outsourcing, driven by its large talent pool and cost advantages.

However, challenges remain, including skill gaps, dependence on outsourcing, and data security concerns. A new US legislative proposal, the HIRE Act, aims to curb outsourcing by imposing a 25% tax on outsourcing payments, potentially impacting Indian IT companies.

While India has strengths in software and IT services, focusing solely on these areas may limit its potential. By embracing chip manufacturing, India can create a more diversified and resilient technology ecosystem. This requires strategic investments, policy support, and a focus on building indigenous capabilities.

India's semiconductor journey has reached a historic milestone, with the first "Made in India" chips being presented. This represents a transformation from a semiconductor consumer to a global manufacturing hub. By prioritizing mature technologies, developing a skilled workforce, and fostering innovation, India can achieve technological sovereignty and economic prosperity.