Semiconductor Industry – Market Potential and Skills Gaps

Extracts from the Report Semiconductor Manufacturing Supply Chain – India’s Opportunity in the Global market. Released by the India Electronics and Semiconductor Association (IESA) at an event recently

The global semiconductor manufacturing supply chain is mainly pivoted around 3 important pillars of the ecosystem.

The three main segments of the semiconductor manufacturing supply chain collectively accounted for US$ 180-200 Bn currently, which is likely to reach US$ 550 – 600 Bn by 2030 at a CAGR of ~10-12%.

Semiconductor Manufacturing Equipment used in the Fab/Foundries and ATMPs/ OSAT’s — The global semiconductor manufacturing equipment segment is expected to reach ~US$ 200 Bn by 2030, from the current levels of ~US$ 71 Bn in 2020

India is already manufacturing some of the important parts along with precision components required for semiconductor manufacturing equipment/sub-systems which are being utilized in different industries such as Aerospace, Automotive, Medical Devices, etc. Some of the major opportunities at India’s doorstep are electrical products such as power control panels, rectifiers, etc. stainless steel plated and polished products, C-parts, and ancillary tools for refurbishment and maintenance. India has a strong MSME base which is into manufacturing some of the spare parts such as bellows, valves, Ball Bearing, actuator, washers, C-parts, etc. which is being consumed in almost all the industries with machinery and are supplied to global markets as well.

Materials (Chemicals, Minerals, and Gases) used in the manufacturing process — Semiconductor production uses hundreds of unique materials, gases, and specialty chemicals which are mainly supplied from China, Japan, Taiwan, South Korea, Germany, and the US. The material and gases market contributed nearly US$ 48 bn to the overall semiconductor industry in 2020 and China is the market leader in the overall production of materials used for semiconductor manufacturing with ~40% market share, followed by other Asian countries (Japan, South Korea, Taiwan) and Africa. This segment is estimated to reach US$ 150 Bn by 2030.

The concentration of OSAT 20201

Semiconductor production uses more than 150 materials, many unique chemicals such as sulfuric acid, nitric acid, Hydrochloric Acid, Hydrochloric Acid, ethanol, acetone, phosphoric acid, etc., minerals including aluminum, antimony, arsenic, beryllium, bismuth, boron, carbon, chlorine, cobalt, copper, fluorine, gallium, and germanium among others and gases like hydrogen, argon, nitrogen, oxygen, helium, etc.

India has many of the chemicals, minerals, and gases used in semiconductor manufacturing which have been used by different segments of the Indian industry such as Pharmaceuticals, Paints, Automotive, etc.

The Indian materials industry will have to improve the quality and purity of these materials (Chemicals, minerals, and gases) to be of semiconductor manufacturing grade.

Large global equipment OEMs have demonstrated this capability with Technology/Engineering centers based in India, wherein the local workforce is meeting the requirement of the global market demand.

Services across the Semiconductor manufacturing value chain. The scope for Services across the Semiconductor Manufacturing ecosystem is estimated to be US$ 180 – 200 Bn by 2030.

The services and skills segment includes areas like Fab services, ATP services, Semiconductor Manufacturing Equipment Services, Supply Chain Services, Automation Services, and Skills aligned with the semiconductor manufacturing industry. India has the availability of skills required across the semiconductor manufacturing supply chain, which are currently being utilized in different industries.

Top 10 Semiconductor Manufacturing Equipment Companies1

R&D AND MANPOWER

Global Equipment OEMs are also keen to work towards setting up R&D Labs in India with the scope for prototyping, testing, measurements, characterisation, etc.

They are keen to work with and develop the local talent to be able to work in these Labs. However, seek strong policy support from the Government to make this a viable value proposition to set up Labs and service the Domestic and Global market requirements.

India has one of the best human resources available for design which can be further leveraged to set up the Semiconductor engineering and equipment designing labs. Through this approach, there is scope to create IP in this space as well

India can provide services to large semiconductor companies in the Industry 4.0 implementation as it is one of the major countries which occupies a major talent in AI, big data, cloud computing and IoT.

Virtually, all the world’s biggest fabless chip companies have an Indian presence, and it can be rightly said that India has the capabilities required to be a part of the IP creation supply chain. Over the years, many major global semiconductor companies have established their chip development R&D centers in India.

This has built a critical mass of talent in semiconductor design and a vibrant domestic design services market.

Most of the major semiconductor companies (TI, Broadcom, Intel, Qualcomm, Western Digital, and Samsung & Huawei) have their fabless Intellectual Property (IP) & System-on-Chip (SoC) design houses in India. India retains excellent chip designing capabilities as tens of thousands of engineers work directly in VLSI designing and their chips are tapped out in leading-edge labs around the world.

Semiconductor Industry table 11

Virtually, all the world’s biggest fabless chip companies have an Indian presence. However, indigenous design IP creation is still nowhere seen in India.

SKILLS

For manufacturing high-quality semiconductor chips in India, there is a need for the availability of highly skilled personnel. Semiconductor manufacturing requires skills in domains like Microelectronics, Optics, Physics, Material Sciences, chemicals, etc.

Bangalore, the capital city of the state of Karnataka, based in southern India, is known as the ‘mini–Silicon Valley’ or the ‘Silicon Valley of India’ due to the abundance of chip design centers of all the major fab players. Bangalore has been a pioneer in bringing the semiconductor ecosystem to India by employing thousands of software engineers, postgraduates, and PhDs in the designing segment. In fact, it can be the first again in terms of thinking beyond software and introducing the fab ecosystem in the country due to the presence of the right manpower, skills, and support from the government.

Arvind Bali interview

One of the country’s biggest gaps according to the report: India (government + private) invests 0.65% of its GDP on R&D (across sectors) in comparison to China (2.4%), the United States (2.85%), and Europe (2.18%).

By V&D Bureau

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