India’s semiconductor component market to grow to $300 billion in 2026, report

India's semiconductor component market is expected to grow at compound annual growth rate (CAGR) of 19% to $300 billion in 2026 in terms of revenue from $119 billion in 2021, shows 'India Semiconductor Market Report, 2019-2026' by India Electronics & Semiconductor Association (IESA) and Counterpoint Research, published on Tuesday. 

This will make India the second largest market after China in terms of scale and growing demand for semiconductor components, the report claims. 

Mobile and wearable devices currently account for 51% of the semiconductor revenues in India, followed by IT (20%), industrial (9%), consumer electronics (7%) and telecom and automotive (5% each). 

“The gradual shift from feature phones to smartphones has been generating increased proportions of advanced logic processors, memory, integrated controllers, sensors and other components,” Tarun Pathak, Research Director at Counterpoint Research said in a statement. 

Pathak points out that smartphones, wearables and TWS will continue to drive the value of semiconductor components. 

The report further shows that share of locally sourced semiconductor components is also expected to grow from 9% in 2021 to 17% in 2026. 

Industrial (38%), automotive (33%) and aerospace and defence (24%) are the three sectors with the highest share of locally sourced components in 2021. By 2026, their share is expected to grow to 44%, 38% and 28%, respectively. 

During this period the biggest jump is expected in IT sector, which is projected to grow from 5% to 26%. Local sourcing in consumer electronics is expected to grow from 11% to 26%. 

Neil Shah, Vice President at Counterpoint believes that the telecom sector driven by 5G and fiber network rollout will also play a key role in driving up local demand for semiconductor components. 

“The consumption will not only come from the semiconductor-heavy 5G and FTTH network infrastructure equipment, which will contribute to over 14% of the total semiconductor consumption in 2026, but also from AI-driven 5G endpoints, from smartphones, PCs, connected cars, industrial robotics to private networks,” he added. 

The report attributes the growth in local sourcing of components for semiconductor to Make in India and Production Linked Incentive (PLI) schemes by government of India. 

Going forward, policy reforms and an evolving semiconductor ecosystem will cut dependence on imports for components. 

India announced a ₹76,000 crore PLI scheme for semiconductor design and manufacturing last December.