India can leapfrog in global semiconductor race as demand set to cross USD 200 billion by FY35: NITI Aayog
New Delhi, May 29
India has a timely opportunity to leapfrog legacy stages and emerge as a competitive force across critical segments of the global semiconductor supply chain, as demand for chips surges on the back of AI, 5G/6G, IoT and electric mobility, according to a new research report by NITI Aayog.
The shift toward AI accelerators and application-optimised architectures is redefining the industry and opening strategic windows for India to move beyond consumption to co-creation of frontier technologies.
"Semiconductors are the foundation of technologies driving the future, including AI, the Internet of Things (IoT) and the expansion of 5G/6G networks," the NITI Aayog report states. It adds that rising computational demands from data centres, autonomous vehicles and quantum computing are creating "unprecedented demand for semiconductors," and their importance will only grow as the digital revolution enters its next phase.
The global semiconductor market, which grew at a CAGR of 6.5% between 2014 and 2024, is expected to accelerate to 8.5% over the next 5-10 years, the report notes. Global sales are projected to rise from $631 billion in 2024 to $1,029 billion by 2030 and $1,547 billion by 2035.
Parallel to the global surge, India's semiconductor demand is on an accelerated path. "It is projected to grow at a CAGR of 19 per cent, reaching around USD 90 billion by FY2030 and potentially expanding further to over USD 200 billion by FY2035 if this momentum continues," the report said.
This trajectory is underpinned by strong growth in electronics manufacturing, accelerated rollout of data centres and cloud infrastructure, rising semiconductor content in automotive, particularly EVs and ADAS, and widespread adoption of AI across consumer and enterprise workloads.
However, the report flags that the global value chain remains highly interconnected and vulnerable. "This deeply interdependent value chain has exposed vital industries to significant vulnerabilities in the past, stemming from natural disruptions and geopolitical tensions, prompting major countries to accelerate efforts to build resilient local ecosystems," it said.
The industry itself is undergoing a structural shift. "The shift toward AI accelerators such as GPUs, NPUs and domain-specific processors is redefining semiconductor design requirements, pushing the industry beyond traditional logic chips toward heterogeneous, application-optimised architectures," the report noted. Performance is now increasingly dependent on advanced packaging like chiplets and 2.5D/3D integration, as well as new materials such as SiC and GaN.
To capitalise, the report urges India to act fast. "To realise this opportunity, India needs to move beyond being a downstream consumer to becoming a co-creator of frontier technologies that will shape global compute leadership. This calls for building capabilities in design, advanced packaging and strategic manufacturing."
Across end-use sectors, semiconductors are becoming the intelligence core. In power and energy, wide-bandgap chips govern efficiency and grid stability. In defence and aerospace, trusted chips underpin sensing and secure comms. In healthcare, sensors and low-power processors drive digital diagnostics, while in agriculture, chips convert field data into edge intelligence for farm-level decisions.
— ANI
Reader Comments
These projections of $200 billion demand by 2035 sound exciting but let's be realistic. Semiconductor manufacturing requires massive capital, consistent water and power supply, and a robust supply chain. Have we fixed our power issues in manufacturing hubs? And what about our dependence on imported equipment? 🤔 Need to see concrete plans, not just reports.
This is a golden opportunity for India! The shift toward AI accelerators, chiplets, and advanced packaging means we can skip the older generation fabs and jump to cutting-edge tech. Our design talent is world-class - just look at how many Indian engineers lead chip design at global firms. With the right government support and industry collaboration, we can become a semiconductor powerhouse. 💪
As someone working in the electronics industry, I can say this is not just hype. The demand for chips in EVs and IoT is real and growing exponentially. India's electronics manufacturing has already seen a huge push with the production-linked incentive scheme. But we need to address the infrastructure gaps - reliable power, water, and skilled workforce are non-negotiable for fabs. Let's hope the government walks the talk.
This is a well-researched report by NITI Aayog. The key takeaway for me is the need to build resilience in the global supply chain. The Covid-19 chip shortage showed how vulnerable we are. India has the talent and market to be a major player. But we need to move beyond assembly and testing to actual fabrication and design. The government should create special semiconductor zones with world-class infrastructure. 🔧
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