India’s semiconductor manufacturing industry plays a pivotal role in driving growth in the machining sector, forming a symbiotic relationship crucial for precision manufacturing. Machining processes are integral to creating the intricate structures of semiconductor chips, which are the foundation of modern technology. This interdependence highlights how advancements in one sector often spur growth opportunities in the other.
In recent years, the demand for semiconductors has surged due to the rapid expansion of technology and widespread adoption of smart devices. However, this increased demand has strained the semiconductor supply chain, causing disruptions that impact various industries, including machining. Shortages and delays in the global semiconductor supply chain directly affect the availability of components essential for machining equipment, potentially leading to production inefficiencies.
Furthermore, fluctuations in semiconductor prices pose additional challenges for machining businesses. As semiconductor prices rise due to supply constraints, machining companies may face increased costs for equipment and components, affecting their competitiveness in the market.
India’s Semiconductor Landscape Transformation
To address these challenges, the Indian government recently approved three new semiconductor manufacturing facilities, marking a significant milestone for the country’s technology and machining sectors. These strategic developments are poised to reshape India’s position in chip manufacturing and technology, presenting vast opportunities for the machining industry.
Approved on February 29, these state-of-the-art semiconductor units include a Semiconductor Fab with a 50,000 wfsm capacity in Dholera, Gujarat, a Semiconductor ATMP Unit in Morigaon, Assam, and a Semiconductor ATMP Unit for Specialized Chips in Sanand, Gujarat.
Impact on the Machining Industry
The approval of these semiconductor facilities is expected to have several significant impacts on the machining industry:
- Job Creation and Employment Opportunities:
The facilities are projected to generate 20,000 direct advanced technology jobs and approximately 60,000 indirect jobs, benefiting both the machining and semiconductor sectors. - Increased Demand for Machining Services:
The operationalization of these semiconductor units will lead to a surge in demand for machining services and equipment, particularly for producing components for various semiconductor chips. - Expansion of Machining Markets:
India’s strategic positioning as a global hub for chip manufacturing will expand machining markets, offering new opportunities for supplying components and services to the semiconductor industry.
India’s Semiconductor Program Progress
The Indian government’s commitment to the semiconductor and display manufacturing initiative is evident through:
- Enhanced Funding and Incentives:
A 130 percent increase in funding in the 2024 Union Budget, with fiscal incentives covering 50 percent of the project cost for setting up semiconductor fabs. India aims to generate over 300,000 jobs in the semiconductor industry by 2026. - Semiconductor Market Growth:
India’s semiconductor market is projected to reach US$100.2 billion by 2032, presenting significant opportunities for the machining industry to meet the escalating demand for semiconductor components.
Focus on EVs and Technological Advancements:
The rise of electric vehicles (EVs) in India will drive demand for semiconductors in critical fields like safety and electrification, providing opportunities for machining companies to produce components tailored for EV-related semiconductor applications.
India is positioning itself as a key player in the global semiconductor value chain, and machining businesses can capitalize on this momentum by aligning their services and products to meet the evolving needs of the semiconductor manufacturing sector. The approval and establishment of these three new semiconductor units in India signify a monumental leap forward for the machining industry.