India eyeing its first very own semiconductor plant keeping the next generation economy in mind

Semiconductors play a significant influence on how our lives are lived because of their use in the production of electrical devices. Imagine a world without technology. Radios, TVs, computers, video games, and subpar medical diagnosis tools wouldn’t exist. Vacuum tube technology may be used to create a variety of electronic devices, but advancements in semiconductor technology over the past 50 years have made electronic manufacturing simpler and efficient.

What is a semiconductor?

A semiconductor is a solid material. It is the  result of the inclusion of impurity or is a result of temperature changes. It  exhibits conductivity between that of an insulator and that of the majority of metals. Most electronic circuits require semiconductor devices, particularly silicon, as key elements.

Semiconductors are substances with conductivity intermediate between that of conductors (often metals) and that of nonconductors or insulators (such as most ceramics). Semiconductors can be made of compounds like gallium arsenide or cadmium selenide or pure elements like silicon or germanium. Small amounts of impurities are doped into pure semiconductors, which significantly alters the material’s conductivity.

Why is India keen to establish a semiconductor plant?

As governments compete for a footing in the production of these crucial components, which power everything from traffic lights to cutting-edge weaponry, semiconductors have become the new theater of war in the high technology sector. India has entered the race to establish itself as a significant semiconductor manufacturing hub.

With both Western and Eastern nations investing in, boosting, and modernizing chip manufacturing to avoid shortages seen over the past two years due to covid-induced disruptions and the geopolitical scenario, the necessity to build a robust ecosystem at home has become a global phenomenon.

Vedanta group and an overview of its new semiconductor plant in Gujarat

The construction of a Vedanta-Foxconn semiconductor facility in Gujarat has been confirmed and announced. According to reports, Vedanta’s historic investment of 1.54 lakh crores will contribute to the establishment of India’s Atma Nirbhar Silicon Valley. Anil Agarwal, the CEO of the Vedanta group, later stated on Twitter, “History is created!” Vedanta chose Gujarat over Maharashtra for its semiconductor factory, according to Anil Agarwal.

The impact of India’s own semiconductor plant on society

Gujarat, the home state of Prime Minister Narendra Modi, will get a $19.5 billion investment from Vedanta and Taiwan’s Foxconn for the construction of semiconductor and display manufacturing facilities. The 1.54 lakh crore investment, which Gujarat claimed was the largest ever made by any group in an Indian state, comes ahead of crucial local elections in the state, where opposition parties are posing a serious threat to PM Modi’s ruling coalition.

More than 100,000 employment opportunities would be created in Gujarat as a result of the Vedanta-Foxconn joint venture project, according to the firms.

According to the state government’s statement, Vedanta would establish a display manufacturing unit with an investment of $945 billion and separate chip-related production facilities with an investment of $600 billion. Vedanta and Foxconn will collaborate closely with the Gujarati government to create high-tech clusters with the necessary infrastructure, such as land, semiconductor-grade water, and electricity.

The influence of semiconductors in the modern-day world economy

Despite a 3.5% decline in global GDP, the Semiconductor Industry Association announced that global semiconductor sales increased by 6.6% to 440 billion US dollars in 2020. This size and value suggest that leaders in various industries care about the function that semiconductors play in global goods and operations or the economy in general.

Measuring sales as a proportion of GDP over time, which also accounts for the effects of inflation, economic growth, and recessions is one way to assess the economic contribution of semiconductors. This method demonstrates that over the past three decades, the importance of worldwide chip revenues relative to GDP has doubled, rising from 0.25% of global GDP to over 0.50% in both 2020 and 2021

Semiconductors may contribute to only a small percentage of global GDP, but they power trillions of dollars of goods and processes. In addition to the rising global demand, semiconductor demand is also heavily driven by digital transformation and further accelerated by the pandemic.

In the automotive industry, as cars are becoming increasingly digitalized, the average car in 2010 contained US$300 worth of microchips. This will likely increase to more than US$500 in 2022, totaling over US$60 billion for 2022.

Despite only making up a small portion of the global GDP, semiconductors power products and processes worth trillions of dollars. In addition to growing worldwide demand, the digital transformation and pandemic have further boosted the demand for semiconductors

How will establishing its own semiconductor plant help the Indian Economy?

A semiconductor is essentially a microchip or an integrated circuit. The semiconductor’s primary job is to provide insulation to the other two materials and conduct electricity within the two respective materials. An essential component of electronics, a semiconductor combines the characteristics of an insulator and a conductor.

The majority of electrical devices in use today include semiconductors as a key component. A few of the most popular gadgets are watches, mobile phones, laptops, computers, and medical equipment, to name just a few. Electronic devices that contain semiconductors will operate more quickly, efficiently, and affordably.

Modern electronics cannot function without semiconductor chips, which are the most essential component of the semiconductor. These chips are currently used in many household appliances, ECG machines, vehicles, etc.

The Indian semiconductor market is anticipated to increase by $400 billion by 2025. This is due to the fact that the demand for semiconductor products is growing every day.

The availability of talent and expanding demand are the two key drivers of the semiconductor industry’s expansion. The Indian Semiconductor Association estimates that between 2021 and 2026, the semiconductor market would grow at a CAGR of 19%.

Conclusion:

Companies have frequently refrained from opening operations in India due to the high startup costs, the lengthy factory construction process, and the unpredictability of the business, tax, and trade environments. Apprehensions on these grounds led to the failure of earlier initiatives in India.