While India is making solid strides toward developing its semiconductor manufacturing industry, more must be done on the product side to grow the ecosystem, according to Satya Gupta, president of the VLSI Society of India. Speaking to DIGITIMES Asia recently, Gupta emphasized that chip makers require a market within the country to be feasible, rather than solely depending on exports.
"India has very few semiconductor product companies," Gupta noted. "When I refer to product companies, I mean entities like Qualcomm, Broadcom, MediaTek, and the like, which primarily drive the manufacturing business. These companies don't own any fabs. In our industry, they are termed 'fabless companies'."
India needs to strike a balance between products produced domestically, in-house manufacturing or fabrication, and design. Achieving equilibrium among these elements, and integrating this with the electronic products designed or consumed in India, will lead to the creation of a comprehensive ecosystem.
"While we have limited fabrication activities, some initiatives have begun," Gupta continued. "We must build on this foundation and aim to catch up with global standards in the next 10 to 15 years. With a stronger emphasis on product design, we can match global benchmarks."
What more to do
The government's role in offering incentives and subsidies is pivotal for industrial growth. What is the ideal scenario for enhancing these sectors through governmental policies and incentives?
"To start, let's address the existing incentives," Gupta explained. "The benefits under the India mission are arguably unparalleled globally. These incentives, considering the project percentages and total allocations, surpass those in other major economies. Yet, as time advances, there might be a need for the government to amplify the funds earmarked for these incentives. At present, our manufacturing incentives are performing exceptionally well."
The critical query then becomes: what additional measures can be taken? A majority of the Indian government's incentive programs, whether for electronics or semiconductors, prioritize manufacturing. These incentives predominantly cater to manufacturing, allowing beneficiaries to reap the rewards. The semiconductor industry's incentives are channeled towards the capital expenditure for manufacturing.
"I would propose that for every $100 allocated to manufacturing incentives, $10 should be earmarked for product incentives, be it for electronics or chip-level commodities," Gupta proposed. "For instance, if we designate $10 billion for semiconductor manufacturing incentives, allocating 10 percent for product enterprises could stimulate the evolution of numerous companies and fortify the manufacturing sector's sustainability."
In essence, while manufacturing prowess is vital, India also needs a sustainable market. The nation currently lacks a strong domestic consumer base, leaning heavily on international clients. Investing in product design over the upcoming five to seven years could lead to the launch of high-volume Indian products, subsequently amplifying manufacturing requirements. This logic extends to the electronics domain as well.
"As it stands, there's an absence of a dominant Indian smartphone brand," Gupta observed. "Without incentivizing product design and endorsing local brands, our dependence on international names will persist. For enduring stability, a substantial local product market share is imperative. If Indian enterprises could secure a 25 percent stake in the electronics or semiconductor product market, it would markedly elevate India's stature in both the electronics and semiconductor realms."
Encouraging this discourse
One primary objective Gupta underscores is the need to raise awareness about investing in product-centric ventures. VLSI is progressively accentuating the importance of product development in tandem with manufacturing. The government has historically favored manufacturing, associating it with job creation, and this isn't without merit. Nonetheless, evaluating the employment opportunities stemming from product design reveals that they are on par with manufacturing.
"For context, an electronics manufacturing technician might earn approximately 20,000 rupees monthly," Gupta elucidated. "Conversely, a product design engineer's salary could be nearly fivefold. A balanced strategy is crucial. Manufacturing provides the cornerstone for product inception. Given our current expertise in electronics, combined with emerging prospects in semiconductors, it's time to harness this base and channel our energies towards innovating indigenous products."
Conclusion
India's trajectory towards semiconductor eminence relies on a comprehensive approach that seamlessly blends manufacturing with rigorous product innovation. Gupta's insights accentuate the imperative of nurturing an ecosystem that harmoniously integrates manufacturing, product design, and policy reinforcement.
The commendable incentives provided by the Indian government could be complemented by a strategic push towards bolstering indigenous product companies. This could catalyze domestic demand, reducing the dependency on international clientele. As India stands on the cusp of a semiconductor renaissance, adopting an all-encompassing strategy might be the key to positioning the nation as a formidable contender in the global electronics and semiconductor sectors.
