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India and Singapore are strengthening ties in critical sectors like advanced manufacturing and semiconductors.

Semiconductor Industry in India

India's semiconductor industry is growing rapidly, and the country is becoming a global hub for semiconductor manufacturing. The industry is growing with a compound annual growth rate (CAGR) of 20.1%. 

The Indian semiconductor market was valued at around $27 billion in 2022. 

India is expected to create over 300,000 jobs in the semiconductor industry by 2026.

Increasing demand

• The demand for consumer electronics is increasing, which is driving demand for semiconductors. 
• The demand for IoT applications is increasing, which is driving demand for semiconductors. 
• The rollout of 5G technology is driving demand for semiconductors. 
• Artificial intelligence (AI) is driving demand for advanced chips and packaging 
• The use of cloud computing is increasing demand for semiconductors 
• EVs require more semiconductors than traditional cars 

Production of semiconductors in India

India's semiconductor industry is growing, with the government, private companies, and strategic partnerships working to increase production. The goal is to reduce India's reliance on imports and become a major producer of semiconductors. 

India imports nearly all of its semiconductors, with estimates ranging from 95% to 100%. The country's main sources of imports are China, Taiwan, South Korea, and Singapore. India is developing its semiconductor industry, but it's still in its early stages. 

Recent developments

• India's first advanced chip manufacturing facility, located in Gujarat, is expected to start production in December 2026. 
• The government approved four new semiconductor manufacturing units in 2024. 
• The state government is working to establish itself as a semiconductor manufacturing hub. 

Current status

Market size: In 2023, the Indian semiconductor industry was valued at $34.3 billion. 

Imports: India is a net importer of semiconductors, mainly from Taiwan, China, Korea, and Vietnam. 

Exports: In 2022, India's semiconductor exports were $0.52 billion, the highest ever. 

Design talent: India contributes 20% of the world's semiconductor design talent.

Growth drivers

• Government initiatives: The India Semiconductor Mission (ISM) and other programs provide incentives and fiscal support to build a robust semiconductor ecosystem. 
• International collaborations: India has partnerships with companies like PSMC (Taiwan) and Synopsys (USA), and collaborations with countries like the US and Japan. 
• Strategic investments: Funding for the semiconductor industry has increased significantly, and the country is establishing new semiconductor manufacturing facilities. 

Challenges

The Indian semiconductor industry faces many challenges, including a shortage of skilled labor, high costs, and competition from other countries. 

Labor: India lacks skilled professionals in chip design, fabrication, testing, and packaging. The government has launched programs to train young engineers and establish centers of excellence. 

Cost: Setting up a semiconductor manufacturing plant requires a large amount of capital.  The use of high-end technologies that are licensed from patent holders at a high price. 

Infrastructure: The need for an uninterrupted 24/7 power supply, which is not available in many regions. The need for large quantities of clean water and sophisticated water purification facilities. The need to build cleanrooms to avoid contamination. 

Supply chain: The need to establish a reliable supply chain for raw materials. The industry is susceptible to trade conflicts between countries. Sanctions may impact the flow of material and components. 

Bureaucratic inefficiencies: The process of establishing an indigenous semiconductor facility requires clearances and approvals from multiple government departments. 

Environmental concerns: The semiconductor industry uses large quantities of hazardous chemicals. 

Government initiatives

• Production Linked Incentive (PLI) Scheme: Provides financial incentives to companies that manufacture semiconductors and electronic components in India. 
• Make in India initiative: Focuses on enhancing local manufacturing capabilities. 
• India Semiconductor Mission (ISM): A dedicated division under Digital India Corporation to build a robust semiconductor and display ecosystem. 
• Semicon India program: A program with a budget of ₹76,000 crore to develop a sustainable semiconductor and display ecosystem 
• Financial support: The government provides financial support to companies that invest in semiconductor manufacturing, design, and display manufacturing 
• High-tech clusters: The government works with state governments to establish high-tech clusters with the necessary infrastructure 
• Modernization of laboratories: The government approved the modernization of the semiconductor laboratory in Mohali. 
• Modified Scheme for setting up of Semiconductor Fabs in India: This scheme provides up to 50% fiscal support for the project cost of setting up semiconductor fabs 
• Modified Scheme for Setting up of Display Fabs in India: This scheme provides up to 50% fiscal support for the project cost of setting up display fabs. 

International collaborations

• Memorandums of Understanding (MoUs): With international consortia such as IGSS Ventures, ISMC, and Vedanta Foxconn. 
• MoC with Japan: To bolster semiconductor supply chain resilience between the two nations. 
• MoU with the European Commission: To strengthen semiconductor ecosystems as part of the EU-India Trade and Technology Council.

India and Singapore ties in semiconductors manufacturing

Both countries are focusing on key sectors such as advanced manufacturing and semiconductors to improve their bilateral relationship, and exploring new opportunities for cooperation.

Singapore’s President Tharman Shanmugaratnam highlighted that both countries are working on projects related to new "generation and net zero" industrial parks. This collaboration will help both nations in skilling for emerging industries, particularly in advanced manufacturing and the semiconductor sector.

Initiatives to promote the cooperation between India and Singapore

Several initiatives are being explored to take the partnership forward. One major focus is the development of a data corridor between the GIFT City in Gujarat and Singapore, which will enable financial institutions in both countries to exchange data securely and efficiently.

Discussions to create a "corridor for renewable energy" between the two nations.

These initiatives aim to promote stronger economic and technological collaboration, especially in the digital and sustainability sectors.

Singapore growth Story in the Semiconductor industry

During the 1970s, Singapore's Prime Minister took several key initiatives to attract semiconductor industries in the country. These efforts laid the foundation for the growth of the semiconductor sector.

The Industry became a significant part of Singapore's economy by the early 1980s, contributing around 7% of its Gross National Product (GNP).

Singapore now produces about 10% of the world’s semiconductor output, solidifying its position as a global leader in semiconductor manufacturing and innovation.

Singapore's strategic location, integrated infrastructure, and skilled workforce have established it as a hub for semiconductor manufacturing.  

What lessons can India learn from Singapore’s semiconductor success?

• Developing specialized wafer fabrication parks that provide the necessary infrastructure for semiconductor production.
• Strengthening collaborations between universities and the semiconductor industry to nurture a skilled workforce.
• Ensuring a stable business ecosystem and a strategic location to attract global semiconductor companies.

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Source: 

The Hindu