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September, 2011


Driven by robust demand in domestic markets, the Indian semiconductor industry is poised to scale new heights in the years to come. Sectors such as telecom infrastructure equipment, automotive, and electronics hardware (industrial and consumer) have been supporting the growth of the industry. Segments like wireless handsets, notebooks and other Information Technology and office automation (IT&OA) products, set-top boxes and smart cards are also vital contributors.

The semiconductor industry is projected to get a major boost from the domestic demand of electronics. Indian Semiconductor Association (ISA) expects electronics sales in India to touch US$ 58.4 billion in 2011 and US$ 400 billion by 2020. ISA also expects semiconductor consumption related to telecom infrastructure would grow by 132 per cent from 2009 to 2011 in India. Consumption related to smart cards is also anticipated to enhance by about 50 per cent.

Market Dynamics

Driven by demand from IT and telecom sector, ISA expects Indian semiconductor market to grow at a compounded annual growth rate (CAGR) of 22.1 per cent to touch US$ 8.04 billion in 2011 as against revenues of US$ 5.39 billion in 2009.

Research firm Gartner estimates India's semiconductor market for 2011 at US$ 8.2 billion, with a growth rate of 15.5 percent. The study highlights factors such as favourable demographics, increasing disposable income in the hands of consumer, economic growth and supportive government that have spurred the progress in the industry. Communications electronics segment (comprising mobile phones, wireless LAN, public switching and other communications infrastructure equipment) is estimated to account for 52 per cent of semiconductor consumption in 2011, followed by computer market (including desktop computers, laptops, monitors and storage equipments) consuming about 26 per cent share of the total semiconductor pie.

Recently ISA and Ernst & Young (E&Y) had conducted a joint study on semiconductor design, embedded software and services industry. According to the analysis made, the Indian semiconductor design industry (consisting of VLSI design, embedded software development and hardware/board design) was estimated at US$ 7.5 billion in 2010 which is projected to reach US$ 10.6 billion by 2012. Moreover, the Indian design industry had employed 1, 60,000 people in 2010 and the count is slated to grow to 2, 34,000 by 2012.

Further ISA released a collaborative research with Frost & Sullivan (F&S) named India Semiconductor Market Update (2010-2012). The research revealed that Indian semiconductor market grew by impressive 28.3 per cent in 2010. The research highlighted that the automotive segment is expected to account for highest growth in semiconductor demand at 31 percent from 2010 to 2012.

India: Semiconductor Industry-Key Developments

  • In a bid to make India a global manufacturing hub, 11 companies (foreign as well as domestic) have demonstrated their keen interest to set up semiconductor wafer fabrication plant (commonly known as fab) in the country. The Department of Information Technology (DIT) has received proposals regarding the same.
  • Nasdaq-listed semiconductor technology provider Microsemi Corporation’s Indian arm Microsemi India is planning expansion in the country. Apart from the sectors of defence and space, the company is looking for opportunities in other segments as well.
  • To take advantage of India’s talented technical manpower and low costs, US-based Freescale Semiconductor has set up its India research and development (R&D) centre in Hyderabad to innovate and develop solutions for the company's new endeavours. The company designs and manufactures embedded semiconductors for the automotive, consumer, industrial and networking markets and the activities at new facility would provide solutions for the same.