China’s chip production shrank so much for the first time since 1997, good news for India

China's chip production shrank so much for the first time since 1997, good news for India

Photo:IANS China’s chip production shrinks for the first time since 1997


  • Local chip production increased in India
  • India’s revenue likely to reach $300 billion
  • Government of India is focusing more than ever

Semiconductor Manufacturing: India and US domestic Semiconductor Manufacturing China has seen its biggest monthly decline in chip manufacturing in August amid a fall in prices, largely due to Covid restrictions and weak demand. According to the South China Morning Post, integrated circuit production declined 24.7 percent year over year to 24.7 billion units, the biggest one-month decrease since 1997.

This is also the second consecutive month of decline in chip manufacturing. Production in July was down 16.6 per cent to 27.2 billion units. Local production of microcomputers fell 18.6 per cent to 317.5 billion units in August. In August, domestic manufacturing activity contracted for the first time in three months, the report noted.

Local chip production increased in India

A record 3,470 chip makers went out of business in the first eight months of the year, according to data from business database platform Kichacha. There is a slowdown in chip production in China, as both India and the US make efforts to boost local chip manufacturing.

Potential to reach $300 billion in revenue

The Gujarat government has partnered with Vedanta and Foxconn to invest Rs 1.54 lakh crore to achieve self-reliance in semiconductor manufacturing. India’s semiconductor components market is expected to reach $300 billion in cumulative revenue by 2026 due to ‘Make in India’ and production linked incentive (PLI) schemes. India Electronics and Semiconductor Association (IESA) and Counterpoint Research will drive local sourcing of quasi-components in the years to come.

Government is focusing more than ever

The Government of India has announced an outlay of Rs 76,000 crore (about $10 billion) separately for the development of the semiconductor and display manufacturing electronics ecosystem under its PLI scheme.

Meanwhile, US President Joe Biden has signed the Chip and Science Act, which provides about $52 billion in semiconductor production incentives. Intel has started work on a new $20 billion semiconductor plant in the US state of Ohio. Samsung plans to invest around $200 billion to build 11 more chip plants in the US over the next two decades.

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