India's semiconductor industry faces supply chain and talent issues

India's semiconductor industry is expanding, but it faces several important challenges. A recent report from Jefferies highlights issues like an underdeveloped supply chain and a shortage of skilled workers. The industry is also up against tough global competition and fast-changing technology. India has advantages, including a strong engineering workforce and supportive government policies. However, to create a competitive semiconductor ecosystem, the country needs to improve its production of raw materials and upskill its workforce. Key materials like silicon wafers and specialty chemicals are crucial for chip manufacturing but are currently limited in availability. The Indian chemical and gas manufacturing sector is well-developed, especially in Gujarat. Still, companies need to improve their capacity to produce semiconductor-grade materials. The government is focused on developing the entire semiconductor supply chain, which includes production of essential chemicals and equipment, to reduce dependence on foreign imports. India is home to about 20% of the global semiconductor design workforce, showcasing its strengths in chip design. However, there is a skills gap in areas related to manufacturing and testing of semiconductors. To tackle this, companies are investing in skill development, and the government is partnering with universities to create specialized training programs. India also competes with established semiconductor hubs like China and South Korea, which have decades of experience. With the growing importance of semiconductors, many countries offer incentives to attract chip manufacturers. India has launched initiatives to attract investments, which have already kickstarted some manufacturing projects. However, setting up advanced chip facilities involves risks, such as production challenges and maintaining quality. The long-term success of India's semiconductor sector depends on securing demand for chips in both local and international markets. Keeping pace with rapid technological changes is another major hurdle, as global companies continuously advance in chip technology. Despite these obstacles, India's semiconductor sector holds promise with ongoing government support, industry partnerships, and investments in research. Building a complete semiconductor ecosystem will be key for India to become a significant player in the global chip market.