Local production of semiconductor chip in India expected to begin in 2-3 years

Around a dozen semiconductor manufacturers are expected to start setting up local factories in the country and begin production in the next two to three, information and technology minister Ashwini Vaishnaw said in an interview. This comes after the government last week approved a production linked incentive (PLI) scheme for the semiconductor and display board production in the country.

File photo of a semiconductor chip and board designed to speed up servers that cater to a growing number of mobile devices - from drones to self-driving vehicles - that perform better with AI. (Bloomberg)
File photo of a semiconductor chip and board designed to speed up servers that cater to a growing number of mobile devices - from drones to self-driving vehicles - that perform better with AI.

In a bid to develop an entire ecosystem for the chip manufacturing industry and avoidance any shortage in the future, the government will start taking applications under the incentive schemes from January. “The response has been very good. All the big players are in talks with Indian partners and many want to come directly to set up their units here," Vaishnaw said in an interview with Bloomberg Television.

Also Read : Long waiting period, lower production in auto industry to remain for years

The approved PLI scheme envisages 76,000 crore investment in semiconductor manufacturing in the country over the next five to six years. While the government has already notified the plan, it expects compound semiconductor units, and design and packaging companies to get approval within the next few months. “In next 2-3 years time frame, we see at least 10-12 semiconductors going into production," Vaishnaw said. He added that at least 50-60 designing companies would have started designing the products in the time frame.

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The PLI scheme for chip manufacturing in the country comes at time when auto industry around the world is facing production headwinds due to the shortage of parts. The move is expected to help the country's auto sector significantly. Demand for chip has sky-rocketed in the aftermath of the pandemic as demand for consumer tech product, that also use chip, increased exponentially under lockdowns.

The chip makers too shifted their production capacity accordingly. But later when the auto industry restarted operation post lockdowns, demand for microchips increased significantly, and a major disruption occurred as chip manufacturers were unable to cater to the demand.

First Published Date: 23 Dec 2021, 09:45 AM IST
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