India emerges as fastest growing market for semiconductor chips: Gartner

Thanks to its exploding appetite for computers, phones and TVs, India has emerged as the World’s fastest growing market for semi-conductors, more commonly known as electronic chips.

Electronic chips, usually black in colour, are the brains of electronic devices and are responsible for controlling their behavior through an built-in system logic which responds to user actions such as the pressing of a button.

India’s consumption of chips of the electronic variety will rise from $7.1 billion last year to $8.2 billion this year, or by 15.5 percent, Gartner said. It will grow at an average of 15.9% till 2015 at to reach nearly $15 billion, Gartner said.

The communications segment, including chips inside mobile phones, wireless LAN and network equipment accounts for around 52 percent of India’s semiconductor consumption, followed by computers and related items with 26 percent.

The overall electronics consumption (including semiconductors) is estimated (by RTN) at upwards of $30 billion (Rs 1.13 lakh crore) Nearly all the semiconductor chips consumed in India are imported from abroad.

Industry, clamoring for government support for hi-tech ventures such as semiconductor fabrication units or fabs have been raising alarm over the poor Indian presence in the World’s biggest industries and one of India’s biggest and fastest growing.

According to a recent taskforce report submitted to A Raja, India’s imports of electronic items is around $25 billion. This will rise to around $83 billion in three years and to a whopping $300 billion by 2020.

In comparison, India spends around $80 billion to import crude oil for own need (excluding re-exports) — currently seen as an enormous strain on the economy that pushes up prices and imbalances its trade equation with the rest of the World.

At present, India does not have the capability to make commercial grade electronic chips, even though many of the most intricate pieces of semiconductors are designed by Indians, in India and abroad.

Despite this, many companies like Nokia, have set up ‘manufacturing’ plants in India by depending on semiconductor chips shipped in from places like China and Taiwan.

Gartner said the electronics consumption will continue to grow in India.

“Changing demographics, increasing consumer affluence, economic growth and favorable government policy continues to drive the electronic equipment manufacturing industry in India,” said Ganesh Ramamoorthy, research director at Gartner.

“Numerous global electronic equipment manufacturing companies have set up production facilities in India, to take advantage of the growing domestic market and to cater to neighboring markets in the region,” he pointed out.