With high growth anticipated in sectors such as automobile, IT, consumer electronic products, the Indian semiconductor industry is poised to scale new heights  Riding high on growth in sectors such as IT, automobile, telecom, electronic products etc, the Indian semiconductor market is set for a quantum leap. A report titled ISA-Frost & Sullivan India Semiconductor Market 2009–2011 Update released by the Indian Semiconductor Association (ISA) stated that the domestic semiconductor industry grew by over 15% in 2009.The report also projected the market to grow at a CAGR of 22.1% by 2011 from 2009, with overall semiconductor market income to grow from US$5.39 billion in 2009 to US$8.04 billion in 2011. According to Anand Rangachary, MD at Frost & Sullivan, “The Indian semiconductor market is one of the rapidly evolving markets in the world and in the next couple of years an expansion in 3Gand WiMax networks, along with increase in usage of computers, set-top boxes etc will further fuel the growth of the sector. By the end of 2011, India’s share in the global semiconductor market is anticipated to touch 2.28%.”
Factors boosting industry growth
Earlier in February this year, a report released by Ernst & Young (E&Y) anticipated the industry to touch US$400 billion by 2020 from the current US$45 billion. Experts opine that an increase in cell phone penetration in the country, coupled with rising demand for electronic products and usage of information and communication tools among business entities will also propel the growth of the sector.
Setting up of manufacturing plants by global handset companies like Nokia across various parts of the country has also fuelled the growth of the industry. Most of these plants depend on local vendors for supplying them with semiconductors to be used in cell phones to curtail manufacturing costs. The same has played an instrumental role in giving a facelift to the industry. On the other hand, these vendors have been implementing high tech manufacturing technology in their production to supply superior quality components. With a phenomenal growth in telecom infrastructure and mobile subscribers in the country, the demand for semiconductors has also risen significantly over the years.
IT companies benefiting the industry
According to Prabhakar Nidamarthy, general manager of Ulvac Inc, a mid-sized manufacturer of semiconductors in Hyderabad, “The industry has also benefited from several IT companies coming up in the country. Another vital factor that has promoted the growth of the industry is the manufacturing of indigenous products.” The announcement by the Government of India (GoI) to reduce customs duty on liquid crystal display (LCD) panels from 10% to 5% will not only boost LCD television manufacturing in the country, but will also promote the growth of the semiconductor industry.
Semiconductor policy developed for states
The semiconductor industry is also expected to benefit from the revival in the computer and its allied industries post economic recession. Analysts also believe that the initiatives undertaken by ISA to develop specific semiconductor policy for various Indian states like Karnataka will also help the sector to notch up higher revenues in the coming years. The policy is aimed at providing several incentives and subsidies to the semiconductor industry of the state.
Arup Choudhury |
