India’s Semiconductor Industry Faces Supply Chain and Talent Challenges: Jefferies

India’s semiconductor industry is witnessing steady growth, but it faces several challenges, including an underdeveloped supply chain, a shortage of specialized talent, and intense global competition, according to a report by Jefferies.

While India has a strong engineering workforce and significant government support, the country needs to overcome critical hurdles to establish a robust semiconductor ecosystem. One of the biggest challenges is the limited availability of key raw materials such as silicon wafers, high-purity gases, specialty chemicals, and ultrapure water—essential components for chip manufacturing. Although India has a well-developed chemical and gas sector, particularly in regions like Dahej, Gujarat, the industry must enhance its capabilities to produce semiconductor-grade materials. The government has prioritized building a domestic supply chain to reduce reliance on imports.

India has a strong presence in semiconductor design, with nearly 20% of the global chip design workforce based in the country. However, there is a significant gap in specialized skills required for semiconductor fabrication and testing. To address this, companies are focusing on skill development, and the government is working with universities and industries to introduce courses tailored to semiconductor manufacturing.

The report also highlighted the stiff competition India faces from established semiconductor hubs such as China, Singapore, Malaysia, South Korea, and Taiwan, which have decades of experience in the industry. Additionally, rapid technological advancements pose a challenge, as India is still in the early stages of setting up fabrication facilities while global players continue to innovate.

Despite these hurdles, India’s semiconductor industry has strong growth potential. With sustained government support, industry partnerships, and investments in research and development, the country can establish a competitive semiconductor ecosystem and emerge as a key player in the global chip industry.

Source: The Economic Times