Gujarat: Next Semiconductor Industry Hub
Electronics is amongst the most intensive global value chain sector in the world, and its global value chains are largely concentrated among a few countries in Asia. The semiconductor industry, which is valued more than USD 400 billion globally, is the most rapidly growing electronics sector. Semiconductors are the cornerstone of modern electronics and they aGujarat, the next Semiconductor Industry Hub, new policy attracts many global groups
The usage of semiconductor ranges from smartphones and cloud servers to modern cars, industrial automation, critical infrastructure and defense equipment. The India Semiconductor Market accounted for $XX billion in 2021 and is anticipated to reach $XX billion by 2026, registering a CAGR of XX% from 2022 to 2027.
The India Semiconductor Mission, a specialised business sector of the Digital India Corporation, was founded by Union Information Technology Minister Ashwini Vaishnaw.
The mission’s goal is to create a thriving semiconductor and display ecosystem that will help India become a global leader in electronics manufacture and design.
First, we need to understand what is a semiconductor?
A semiconductor is a substance that has specific electrical properties that enable it to serve as a foundation for computers and other electronic devices. It is typically a solid chemical element or compound that conducts electricity under certain conditions but not others. This makes it an ideal medium to control electrical current and everyday electrical appliances.
A substance that can conduct electricity is called the conductor and a substance that cannot conduct electricity is known as the insulator. Semiconductors have properties that sit between the conductor and insulator. A diode, integrated circuit (IC) and transistor are all made from semiconductors.
The global market for the semiconductor industry has a total value of $2 trillion. The largest global segment for the industry is computer systems and peripherals, which is over 26% of the overall market. (NITI Aayog). The Indian semiconductor industry is currently responsible for about 1.5% of world electronic hardware production.
The Gujarat government announced a dedicated ‘Gujarat Semiconductor Policy 2022-27’ on 30th July, 2022 with a target to generate at least 2,00,000 new employment opportunities in a period of five years. The Gujarat government has also decided to develop a “semicon city” which would be a part of the Dholera Special Investment Region.
Within less than two months after announcement of policy by Government of Gujarat, two top corporates — Vedanta and Foxconn signed memorandums of understanding (MoUs) with the State government to set up a semiconductor manufacturing facility with an investment of ₹1.54-lakh crore. Prime Minister Narendra Modi tweeted “The investment committed by Vedanta and Foxconn Group for setting up the unit in Gujarat will provide an impetus to the ecosystem for ancillary industries and help India’s MSMEs.
Vedanta Group’s Vedanta Semiconductors Limited will set up an integrated Semiconductor Fab Unit and OSAT (Outsourced semiconductor assembly and test) facility at Gujarat with investment of ₹ 60,000 crore. The unit will operate on the 28nm technology nodes with wafer size 300mm and the display manufacturing unit will produce generation 8 displays catering to small, medium and large applications.
For investors, Gujarat provides a conducive environment to set up semiconductor plants because it was the first to launch a dedicated policy for Semiconductor manufacturing which provided heavy subsidy support on land procurement, capital investment, reimbursements on stamp duty, fixed water tariff, as well as electricity tariff subsidy for a period of 10 years.
Why semiconductor policy can further flourish in Gujarat ? There are many reasons which include presence of excellent industrial infrastructure, with the support of power, water, gas and other related infrastructure,world class export oriented industrial ecosystem with 48 major ports along with 17 operational airports. Special investment regions (Dholera SIR, GIDC, estates, the electronic manufacturing cluster at Mundra), availability of skilled manpower required for electronics manufacturing sector along with state-of-the-art training and skill development centres etc.
Gujarat Chief Minister Bhupendra Patel states “we are extremely proud and happy that the Vedanta-Foxconn JV has selected the industrial state of Gujarat for their semiconductor plant. This is a huge investment coming on the day when we completed 1 year in office which is also a testimony to the policy stability and policy support coupled with good governance and excellent infrastructure facilities existing in Gujarat.
Gujarat industrial investment friendly policy attracts national and global industries to invest in the state. Vedanta and Foxconn signed memorandums of understanding (MoUs) with the State government to set up a semiconductor manufacturing facility with an investment of ₹1.54-lakh crore has proved it that Gujarat is the best state in the country for setting up any industry. Gujarat will soon become hub of semiconductors in not just India but also Asia.
By Nilesh Shukla
(Writer is Joint Director of Government of Gujarat, Gujarat Bhawan)