With the government
approving semiconductor fabrication plants, the electronics manufacturing
ecosystem and the electronics industry as a whole will feel the direct impact
of local production, the Indian economy will also benefit from it. A
fab is estimated to contribute 23 times the investment made to GDP. Its
transformative effect on the electronics industry is tremendous, and has a
stronger multiplier effect than any other industry. Hence, it is a highly
strategic game changer for India that will enable the country to leapfrog ahead
by several years
The Indian electronics hardware industry and the
Indian economy will directly benefit from the proposal. The semiconductor wafer
fabs will have a catalytic impact on the development of downstream and upstream
products, including ancillaries. They will also have a sizable impact on the
development of the IT/ITES sector, particularly in very large scale integration
(VLSI) design software, solutions and services. Besides, these fabs will help
generate employment for 28.3 million (directly and indirectly) people by 2020,
across various levels of competencies.”
Critical for the electronics industry
The fact that
India’s semiconductor market makes up 14 per cent of the country’s total
electronics market indicates the magnitude of the opportunity lost due to the
absence of local fabs. They are at the core of ecosystem development and this
strategic move shall have a ripple effect across the ecosystem. Global analysis
shows that countries like Taiwan, China and USA have been able to build a
fairly strong electronics ecosystem by setting up semiconductor fabs and using
them as the moot point for bringing in the other ecosystem components.
Domestic consumption of electronics is expected to
reach US$ 400 billion by 2020, which translates into a chip market of around
US$ 55 billion. The total semiconductor market in India was $6.03 billion in
2011 and is expected to grow to $9.7 billion by 2015. Right now, India imports
over 65 per cent of its electronics products, including semiconductors.
India
has already become the hub for semiconductor design. More than 20,000 engineers
are engaged in various aspects of chip design and verification. India adds
value by way of design, which accounts for a modest $10 billion. Ironically,
chips that are manufactured outside India, mainly by the Asian countries, are based
on the design work done in India. These chips eventually go into finished
electronics goods that are worth more than $60 billion. The semiconductor
manufacturing companies abroad generate revenue to the tune of US$ 15 billion
from wafer manufacturing based on these designs. Chip packaging and testing
companies also generate US$ 5 billion revenue based on the wafers manufactured
from the India-designed chips.
Selected electronic systems
|
Semiconductor
content (%)
|
Set-top box
|
35%
|
Digital camera
|
34%
|
DVD Player
|
30%
|
Multimedia PC
|
28%
|
Telecom equipment
|
28%
|
Smartphone
|
26%
|
HDTV
|
25%
|
PC
|
23%
|
LAN
|
15%
|
CD Player
|
13%
|
Car radio
|
8%
|
Video camera
|
8%
|
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