Semiconductor companies are starting to turn their focus to
India’s automotive market, where chip content is growing at an
attractive rate in applications such as telematics, infotainment
systems, electric mobility and advanced driver assistance systems.
Demand for advanced infotainment systems, including modem and
cockpit systems-on-chips, is high as these systems emerge as a key
differentiator for original equipment manufacturers. This
enrichment of vehicle content, combined with strong growth in total
industry volume—which will see India second only to mainland
China in its contribution to global light vehicle production growth
between 2024 and 2034—is making India a doubly attractive
location for investment.
Consequently, investments are beginning to mount up for both
research and development and for local manufacturing of
semiconductors. According to a report in
Mint, Taiwanese fabless semiconductor company MediaTek
plans to increase its presence in the Indian automotive sector.
Mike Chang, corporate vice president at MediaTek, was quoted as
saying that the company’s chipsets will be integrated into five car
models by October and 11 more by the end of 2024. MediaTek is also
expanding its R&D efforts, looking to leverage Indian talent
for research and design, with plans to add new sites to its
existing centers in Bangalore and Noida. MediaTek plans to deploy
India-made internet of things modules, apps and clusters, which
make up the infotainment touch screen.
Qualcomm also seems bullish on India. The US company is
reportedly in trials with various automakers for its chipsets and
has teamed up with India’s Tata Motors, Mahindra & Mahindra,
and TVS Motor to drive digitalization in the automotive sector.
Government promotes local manufacturing
Market dynamics are not the sole driver of increasing interest,
the Indian government has also played an active role in boosting
the country’s attractiveness. The government recognized the
country’s heavy reliance on the importation of automotive-grade
electronics and semiconductors. To reverse this, the Indian
government has launched several production-linked incentive (PLI)
schemes under its “Make in India” initiative to boost domestic
production of semiconductors and advanced automotive technology.
Last month, Indian IT Minister Ashwini Vaishnaw said the second
phase of the semiconductor policy, referred to as Semicon 2.0,
is in development and expected to be implemented within three to
four months.
Tata
Electronics, part of India’s Tata Group, is taking
advantage of the semiconductor PLI scheme to establish a
semiconductor assembly and test facility in Assam. The facility is
expected to begin production by late 2025 or early 2026, catering
to the automotive, power, electronics and other industries. A month
ago, Tata Electronics made headlines by partnering with Powerchip Semiconductor
Manufacturing to establish India’s first semiconductor
fab in Dholera, Gujarat. This facility will have a manufacturing
capacity of up to 50,000 wafers per month. The fab will manufacture
chips for applications such as power management integrated
circuits, display drivers, microcontrollers and high-performance
computing logic, addressing the growing demand in markets such as
AI, automotive and computing. Recently, Analog Devices
announced a strategic alliance with Tata Electronics and Tata
Motors to explore semiconductor manufacturing opportunities in
India.
Likewise, India’s L&T Semiconductor Technologies has signed
a memorandum of understanding with the Centre for Development of
Advanced Computing to promote indigenization and accelerate
innovation in semiconductor design and development. The
collaboration focuses on creating Make in India integrated
circuit/system-on-chips and electronics system design and
manufacturing solutions for automotive and other applications. In
the automotive sector, the company is developing high-end silicon
chips to support the growing demand for software-defined vehicles
and electric mobility. L&T Semiconductor Technologies CEO
Sandeep Kumar told Reuters in August that the company would sign
contracts with six automobile
companies.
The growing demand for chips has attracted investment from
relatively new players as well. Recently, Kaynes Semicon
received approval to set up a semiconductor manufacturing unit in
Sanand, Gujarat. It aims to produce 6 million chips daily for
various applications, including automotive.
Automotive semiconductor manufacturing is in its early stages in
India, but rapidly growing demand for vehicles equipped with
advanced connectivity and safety features bodes well for the
industry.
Authored By: Rohan Hazarika, Senior Research Analyst,
Supply Chain & Technology, S&P Global Mobility
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