Semicon industry 2025: Trends, challenges, and India’s emerging role

The global semiconductor industry stands on the cusp of a transformative decade, with projections to reach $1 trillion in revenue by the early 2030s. Propelled by advancements in artificial intelligence (AI), high-performance computing (HPC), the rise of electric and autonomous vehicles (EVs), and next-generation connectivity, semiconductors are integral to technological innovation and global economic progress.

As demand soars, the industry is rapidly expanding its production capacity to keep pace with emerging technologies and applications. According to the latest SEMI World Fab Forecast report, 105 new fabs are expected to become operational between 2023 and 2027, with 32 currently under construction, 38 in early operational stages, and 16 in the equipping phase. However, further expansion will be essential to meet projected demand and achieve the $1 trillion revenue milestone.

For India, this evolving landscape presents a unique opportunity to establish itself as a pivotal player in the global semiconductor ecosystem. With its robust talent pool, progressive government initiatives, and growing infrastructure, India is well-positioned to contribute meaningfully to the industry’s future.

Growth drivers transforming semiconductor industry
Several key drivers are reshaping the semiconductor industry and unlocking new opportunities. These drivers highlight the semiconductor industry’s central role in enabling progress across diverse sectors while fostering economic development on a global scale.

Artificial intelligence (AI): The proliferation of AI applications has spurred demand for advanced processors and GPUs capable of handling real-time, complex computations. From healthcare diagnostics to machine learning systems and autonomous systems, semiconductors form the foundation of AI’s transformative potential.

High-performance computing (HPC): HPC is increasingly vital for cloud services, big data analytics, and scientific research. Energy-efficient and high-capacity chips are in high demand to support growing computational needs.

Electric vehicles (EVs) and autonomous technologies: The transition to EVs and the rise of autonomous vehicles have escalated the demand for semiconductors that power safety systems, sensors, battery management technologies and many other applications. These innovations underpin the next generation of smart mobility.

Sustainability and green semiconductors: As the world prioritizes sustainability, the semiconductor industry is adapting its manufacturing practices. The industry is adopting greener manufacturing processes, reducing carbon emissions, and developing energy-efficient chips. These efforts align with global climate goals and reflect the industry's commitment to a more sustainable future.

5G expansion and 6G transition: The ongoing rollout of 5G networks and initial developments in 6G are further accelerating semiconductor demand. Advanced communication infrastructure requires semiconductors that enable faster speeds, higher bandwidth, and optimized energy efficiency. In India, the deployment of 5G has fuelled growth across IoT devices, connected technologies, and smartphones.

Key challenges: Talent shortage, climate change, and geopolitical tensions
Despite promising growth, the semiconductor industry faces formidable challenges that require collective action to sustain its growth trajectory.

Talent shortage: The global industry is grappling with a widening talent gap. There is a critical need for skilled engineers, technicians, and innovators capable of meeting evolving demands and driving innovation and manufacturing excellence. 

Climate change disruptions: Climate-related disruptions, including extreme weather events, threaten semiconductor manufacturing hubs and supply chains, which rely heavily on stable infrastructure, water and energy resources.

Geopolitical tensions: Rising trade restrictions and regional conflicts are disrupting the global semiconductor supply chain, increasing costs and adding complexity to global operations.

Supply chain resilience: The pandemic exposed vulnerabilities in the semiconductor supply chain, leading to chip shortages that disrupted industries like automotive, consumer electronics, and healthcare. While chip shortages have started to ease, ensuring long-term supply chain resilience remains a priority. 

Need for global collaboration
Addressing existing challenges will require proactive strategies and cohesive efforts from governments, industry leaders, and academia. Global collaboration is essential to overcoming these challenges and ensuring the semiconductor industry’s sustainable growth. 

Public-private partnerships (PPPs) and knowledge sharing will be vital to ensure innovation, resilience, and long-term growth in the semiconductor industry. Governments, academic institutions, and industry stakeholders must work together to find solutions in key areas.

Bridging the talent gap: Investments in specialized education, training programs, and partnerships with universities will nurture a skilled workforce capable of meeting evolving industry demands. In India, government-backed STEM initiatives and training schemes are fostering innovation and talent development.

Advanced sustainability initiatives: Industry players must align on climate goals and share best practices to expand adoption of eco-friendly manufacturing and reduce carbon footprints.

Strengthening supply chain resilience: In 2025, semiconductor companies are likely to diversify production, expand regional manufacturing, and reduce dependence on single-country supply chains. Partnerships and collaborations across regions will enhance stability and minimize risks. Diversifying manufacturing hubs and fostering regional partnerships will help stabilize the semiconductor supply chain and reduce geopolitical risks. 

India’s emerging role in semiconductor landscape
India is poised to emerge as a critical player in the semiconductor ecosystem, contributing to both supply chain diversification and talent development. Several factors underpin India’s potential:

Strong talent pool: India’s large base of skilled engineers and tech professionals positions it to address the global talent shortage. Ongoing investments in STEM education and industry-relevant training programs further strengthen the nation’s capabilities.

Government initiatives: Programs like the India Semiconductor Mission (ISM) and the Production Linked Incentive (PLI) scheme are attracting global investments and fostering domestic manufacturing.

Strategic location: India’s geographical positioning near other key Asian chip hubs and its expanding infrastructure make it an ideal hub for both domestic and global semiconductor markets.

To solidify India’s position as a semiconductor hub, India must focus on three areas: 

Infrastructure development: Building infrastructure to support semiconductor fabs, research centers, and robust supply chains will be critical to boosting domestic production capacity. Additionally, focusing on attracting semiconductor ecosystem facilities for wafer production, packaging, assembly and test will further strengthen India as a draw for fabs.

Global partnerships: Collaborating with global industry leaders will accelerate technology adoption, foster innovation, and enable knowledge sharing.

Talent development: Strengthening STEM education and creating industry-relevant programs will ensure a steady flow of skilled professionals to meet growing demand.

By leveraging these strategies, India can emerge as a key player in the semiconductor ecosystem, driving innovation and contributing to global supply chain resilience.

Transformative era ahead
The global semiconductor industry is entering a transformative era, driven by groundbreaking technological advancements, sustainability imperatives, and evolving geopolitical landscapes.

With India emerging as a crucial player, the convergence of technological innovation, government support, and market demand will define the industry's future. India’s strong economic growth, government policies, and vast talent pool present a significant opportunity to emerge as a global semiconductor hub. 

By addressing supply chain challenges, fostering global partnerships, and investing in infrastructure and talent, India can help build a resilient, diversified semiconductor ecosystem that supports technological advancement worldwide. SEMI can play a pivotal role in these efforts, with SEMICON India serving as a platform to bring SEMI’s global network into active engagement with local stakeholders.

Together, through collaboration and innovation, the semiconductor industry can unlock a future of unprecedented progress and opportunity. 

--- Ajit Manocha, President, SEMI USA.