Government incentives, supply chain shifts helping India's chip ecosystem: BCG
What's the story
Boston Consulting Group's (BCG) Managing Director, Ankush Wadhera, has said that the growing demand for electronics in India is creating a major opportunity for the country to build a domestic chip ecosystem. He said this is driven by government incentives and global supply chain shifts. Wadhera also expects artificial intelligence (AI) to keep driving demand for GPUs, memory, and compute.
Growth prospects
Responsible AI discussions won't slow semiconductor growth
Wadhera said that recent discussions around responsible AI development are important "to keep things in check," but aren't likely to slow down the growth of the semiconductor sector.
He described these conversations as "good speed-breakers but they are not stop signs."
The BCG executive believes that the semiconductor-AI linkage will grow, not weaken, with continued demand for GPUs and memory.
Strategic position
India's strategic position in global semiconductor supply chain
Wadhera emphasized India's strategic position in the global semiconductor supply chain, as it accounts for one-fifth of the world's population.
He said, "So if you're going to consume as much as one-fifth of the world's chips, why should we not make them in India."
The BCG executive also noted that India has made significant progress in building domestic semiconductor capacity with several projects announced and facilities now into commercial production.
Policy impact
ISM 2.0 expands incentives for semiconductor sector
Wadhera credited ISM 1.0 for creating initial momentum in the semiconductor sector and noted that ISM 2.0 further expanded incentives, attracting global players as well as Indian companies to the sector.
He said strong domestic demand and government's policy framework is driving significant action in this space.
As more fabs (fabrication plants) and OSATs (outsourced semiconductor assembly and test) move toward production, investment across the wider semiconductor ecosystem is expected to rise.
Expansion plans
Government seeks to move beyond chip assembly and testing
India has stepped up efforts to its establish a larger presence in the global semiconductor value chain, with the government seeking to move beyond chip assembly and testing.
The second phase of the semiconductor program has seen a commitment of ₹1.27 lakh crore from the government to expand the domestic ecosystem and attract global investments.
Under this phase, nearly ₹1 lakh crore in investor interest has been seen so far.