India's Urgent Quest to Tackle Semiconductor Challenges: Why the Rush?


As India accelerates its transition towards electric vehicle (EV) production, one major hurdle stands in its way – the sourcing of semiconductors, often referred to as the "brains" of modern automobiles. This challenge is not unique to India but is a global concern that gained significant attention during the COVID-19 pandemic. Semiconductors are integral to both conventional internal combustion engine (ICE) vehicles and their electric counterparts. This report explores the critical role of semiconductors in India's EV journey and the measures needed to secure a stable semiconductor supply chain.

Semiconductor Shortages: A Global Disruption

The COVID-19 pandemic vividly demonstrated the disruptive potential of semiconductor shortages in the automobile sector. According to S&P Global Mobility estimates, over 9.5 million units of global light-vehicle production were lost in 2021 due to the absence of crucial semiconductors. This impact persisted into 2022, resulting in an additional loss of 3 million vehicles. The first half of 2023 saw the loss of 524,000 vehicles globally. The probability of recurrent semiconductor shortages is high, given the industry's concentration in regions like Taiwan and South Korea and the complexities of lead time for manufacturing - as reported by Deccan Herald

The Growing Automotive Electronics Market

The automotive electronics market, valued at over $250 billion in 2022, is projected to exceed $650 billion by 2032, with a compound annual growth rate (CAGR) of over 8%. The share of automotive sector semiconductor consumption in global total output is expected to rise from 8% in 2020 to 14% by 2030, underscoring the semiconductor sector's significance.

Semiconductor Technology Evolution and Moore's Law

Gordon Moore's 1965 prediction, known as Moore's Law, has guided the development of semiconductor technology. Moore anticipated that transistor counts on microchips would double every two years, driving significant progress in computing capabilities. This prediction has held true for decades and has played a pivotal role in advancing electronics and computer technology, making it possible for EVs to manage the computing demands essential for efficient operation and advanced features.

Semiconductors in India's EV Journey

As India strives to reduce emissions and embrace sustainable transportation through EVs, semiconductors are pivotal to achieving these goals. The Indian semiconductor market is projected to reach $64 billion by 2026, indicating a threefold growth from its 2019 figure of $22.7 billion. However, the domestic supply of semiconductors in India accounts for only 9%, with the majority being imported from Southeast Asian nations dominated by China.

Securing India's Semiconductor Interests

To ensure India's sustainable growth and minimize its reliance on semiconductor imports, concerted efforts are required. In June 2023, the Ministry of Electronics and IT (MeitY) reopened the application window for a Rs 76,000 crore semiconductor manufacturing plan. This initiative aims to attract significant industry players and reduce India's vulnerability to shifting global geopolitics.

India must invest heavily in research and development, foster innovation, and establish strategic partnerships with semiconductor industry leaders to secure its semiconductor interests. Only through these efforts can India establish a strong foothold in this vital sector and ensure its sustainable growth on the global stage.

The convergence of electric vehicles, semiconductor technology, and sustainable transportation solutions presents a complex landscape. The future of transportation is electric, sustainable, and driven by the potential of advanced technologies. India's success in securing a stable semiconductor supply chain will be pivotal in realizing its ambitious goals in the EV revolution and positioning itself as a global hub for export in this transformative industry.



InsightX Newsletter for latest Update /Don’t worry, it’s 100% free