Situated 124 kilometres away from Ahmedabad’s Sardar Vallabhbhai Patel International Airport, the town of Dholera began attracting real estate developers in March this year. At that time, the landscape was mostly barren, marked by a few structures such as the Dholera office and the ReNew solar cell plant.
Despite the sparse surroundings, developers were travelling from Ahmedabad with potential buyers, drawn by the promise of future townships complete with schools, hospitals, and even an airport.
The India opportunity is seen as a reflection of this shift, and Indian companies will essentially be participants in the global semiconductor electronics value chain,” says Rajeev Chandrasekhar, former minister of state for electronics & IT.
The opportunity is immense, given that the semiconductor industry operates as a truly global ecosystem. On an average, each segment of the semiconductor value chain involves 25 countries in its direct supply chain and 23 in supporting market functions. According to an Accenture GSA report, a semiconductor product can cross international borders 70 times or more before reaching the end customer.
Furthermore, with semiconductors powering everything electronic — from devices on earth to equipment in space — globally the industry is projected to reach $1 trillion by 2030, from $600 billion in 2021, according to McKinsey. In India, the semiconductor market is expected to hit $110 billion by 2030, from $22 billion in 2019, as per a report by IESA and Counterpoint Research.
The pandemic exposed a major semiconductor supply chain crisis in 2020, affecting numerous industries. For instance, production of $10,000 cars was halted due to a shortage of a $2 semiconductor, underscoring the vital role chips play in modern technology and manufacturing, and forcing both governments and businesses to recognise the potential for severe impacts on their operations. For some, it was a strategic move to vertically integrate their businesses, while others saw incentives as a compelling opportunity to invest.
The initial cost may be high, but the potential for substantial returns is just as compelling. Globally, semiconductor firms typically return 13-15%,” says P.S. Easwaran, partner and supply chain leader, Deloitte Asia-Pacific. “But the sector has short technology lifecycles for products and hence the need to refresh the portfolio and capex on an on-going basis. This means unlike in other sectors, firms cannot have a strategy of sweating assets over a long period of time.
Source: https://www.fortuneindia.com/long-reads/semiconductor-dream-gets-real/118624
