The Semiconductor Industry and its future

Since the Covid19 outbreak and the onset of the Russia-Ukraine war, many industrialised and developing nations have understood the significance of supply chains and the risks they provide. This has been seen in the situations of numerous items, such as food and oil, whose supply was affected by the Russia-Ukraine war; it is now especially evident in the case of semiconductors.

Every nation, whether developed or developing, requires semiconductors since they are utilised in every electronic device and in a range of areas, including medical, healthcare, defence, renewable energy initiatives, and a number of upcoming projects, such as quantum computing. The leaders in the semiconductors race on the worldwide market are the United States, whose 2020 market share was valued at over $200 billion. The United States has been a pioneer in the export of semiconductors, commanding about 50 percent of the worldwide market. Semiconductors are one of the top export goods of the United States. Additionally, the United States invests more than one-fifth of their sales on research and development, placing them second only to the pharmaceutical business. China is another nation that is emerging as a major participant in the semiconductor race, since it has been making rapid progress in this arena. China’s semiconductor industry has been growing since 2015, when it accounted for only 3.8% of the global supply race. However, in the last 5 years, China’s semiconductor industry has grown from a mere $!3billion in 2015 to an annual growth rate of $40 billion market industry, and China now stands 1% behind Europe and Japan in the semiconductor race, as China’s semiconductor industry accounts for 9% today and the Europe’s and Japan’s annual percentage growth rates are 2% and 3%, respectively. China has already eclipsed Taiwan in the semiconductor business during the previous two years. If China’s semiconductor industry continues to develop at the same rate, its annual sales might reach $114 billion by 2024, placing it just behind the United States and South Korea.

India’s future with Semiconductors

India’s current semiconductor facilities are the Gallium Arsenide Enabling Technology Centre (GAETEC) and the Semiconductor Laboratory (SCL), but all this could change as India’s Prime Minister Narendra Modi has addressed at the Indian Mobile Congress, which helped in highlighting India’s scope and ambitions with the future technology which India t is developing. The government has begun to recognise the importance of semiconductors and how a domestic semiconductor industry could enable India to reduce its dependence on the giants of the Semiconductor industry and increase the ‘Atmanhirbar Plan’ of India. The Prime Minister of India aspires to make India a leader in cutting-edge technology, and semiconductors are a key component in achieving this objective. The United States has long sought to isolate its essential technology supply chains from China; India can provide an assist in this endeavour. In this cooperation, India is projected to contribute a total of $20 billion, which may help India become a superpower and compete with nations like China and European markets in the chip race. Many countries, not just the United States, are adopting a “China Plus One” strategy to reduce their reliance on China and shift their markets to “like-minded countries” such as India. Many private companies, such as Tata and Adana, have also pledged multi-million dollar investments in this project, which can help India’s semiconductor industry grow at a projected rate of $64 billion by 2026, representing a 19% annual growth rate. As India has been relatively weak in this sector, as India’s imports of semiconductors inputs reached $21 billion in 2019 and that figure has been rising rapidly each year, the recent semiconductor manufacturing incentives offered by the government of India will also help the Indian economy as many American companies will expand their capacities in India and this will help in building the right supply chains worldwide and this will also help industries in India. This will also contribute to the growth of the Indian economy.


While all of this is true and will help India in the long run and increase its presence on the global market, India must not forget that the United States has always been focused on increasing its profits and developing its own industry. India must also keep in mind that chip manufacturing requires a great deal of raw materials and that the United States has always been focused on increasing its profits and developing its own industry. The India-United States cooperation cannot be viewed as restrictive to any particular field, and with the rapidly changing geopolitical situation, it is important to remember that China, which is a producer of electronics, is also a consumer, and that one must observe how the semiconductor and high-end chip industries continue and how demand develops.

Anuj Dhyani
Anuj Dhyani
Anuj Dhyani is currently pursuing a master's in Diplomacy, Law, and Business from OP Jindal Global University. My area of interest lies in South Asia, US Foreign Policy, and Chinese Foreign Policy. Currently my academic interests in focused on the security of the Asia region and China’s influence in the region