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Indian semiconductor consumption to grow 19% per annum to $300 billion by 2026: Study

Indian semiconductor consumption to grow 19% per annum to $300 billion by 2026: Study

Indian semiconductor consumption to grow 19% per annum to $300 billion by 2026: Study
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By Vijay Anand  Aug 19, 2022 3:18:56 PM IST (Published)

The study said India is poised to be the second largest market in the world from the perspective of scale and growing demand for semiconductor components across several industries and applications, through the adoption of smartphones, PCs, wearables, cloud data centers, Industry 4.0 applications, IoT, smart mobility, and advanced telecom and public utility infrastructure.

India's semiconductor market, pegged at $119 billion in 2021, will grow at a compounded annual rate of 19 percent to $300 billion by 2026, a joint study by the Indian Electronics and Semiconductor Association (IESA) and Counterpoint Research claims.

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According to the report, the study focused on seven major sectors in India – "Mobile and Wearables, Information Technology, Automotive, Industrial, Telecom, Aerospace and Defence, and Consumer Electronics – from domestic consumption as well as export perspective".
The study finds that India is poised to be the second largest market in the world from the perspective of scale and growing demand for semiconductor components across several industries and applications.
"This demand is being pushed by the increasing pace of digital transformation among the country’s consumers, enterprises and public sector through the adoption of ... smartphones, PCs, wearables, cloud data centres, Industry 4.0 applications, IoT, smart mobility, and advanced telecom and public utility infrastructure," it states.
The report was published against the backdrop of India's thrust to become self-reliant on chips through the Semiconductor India Programme.
In a move to help out automakers to tackle the crisis, the Union Cabinet, on December 16, approved a Rs 76,000 crore semiconductor PLI scheme. Under the design-linked incentive scheme, 50 percent of the design expenditure is to be borne by the government. Additionally, the government will provide a 6 percent incentive on incremental sales; 6 percent will taper over 5 years to 4 percent.
"While the country is becoming one of the largest consumers of electronic and semiconductor components, most components are imported, offering limited economic opportunities for the country. Currently, only 9 percent of this semiconductor requirement is met locally," the study said.
Imagine this — children all over India get educated in virtual classrooms by the country’s best teachers. The chip makes it possible. Again, imagine everyone in the country gets quality healthcare and diagnostics done remotely. Medicines are delivered by drones at your doorstep, even in the farthest villages of India. The chip will make it possible, and we will see this in front of our eyes very soon. Let us make India the semiconductor nation," IESA CEO and President Krishna Moorthy said.
Mobile and wearables, IT and industrial sectors contributed to almost 80 percent of the semiconductor revenues in India in 2021.
“Mobile devices have become a primary tool for internet connectivity given that broadband and laptop/PC penetration remains low ... Also, the gradual shift from feature phones to smartphones has been generating increased proportions of advanced logic processors, memory, integrated controllers, sensors and other components. This will continue to drive the value of the semiconductor content in smartphones," Tarun Pathak, Research Director at Counterpoint Research, said.
Counterpoint Vice-President Neil Shah said the telecom sector, with the advent of 5G, will be a key catalyst in boosting semiconductor consumption — contributing to more than 14 percent of the total consumption in 2026.
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