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: Indian semiconductor industry is getting down to business. Overcoming months of lower demand and anxiety on account of the global economic slowdown, the mood is humming along nicely now.

There are signs of revival in the global semiconductor industry and optimism for the semiconductor players—domestic as well as multinational—is brewing on account of the strong domestic sales in recent times. The main sectors driving semiconductor sales in India are telecom, automotive, industrial electronics and consumer electronics. Other sectors like solar, renewable energy, intelligent healthcare too are chipping in with their growing appetite for semiconductor products.

Inventory periods for semiconductor products have reached a 60-day level in the first quarter of 2009, as compared to a 77-day period in the last quarter of 2008. The Indian Semiconductor Association (ISA) estimates the total revenue of the Indian semiconductor market to grow from $5.9 billion in 2008 to $7.9 billion in 2010 at a CAGR of around 13%. At the same time, ISA feels that the current slowdown will impact manufacturing investment prospects in the country.

In spite of this, one of the bright spots, according to Gartner, is that the PC and the laptop markets have bottomed out and things are likely to improve. The utilisation of fabs, which was less than 50% just a few months ago, has picked up. Some of the chip manufacturers have witnessed a growth in their quarterly revenue forecasts. The wireless handset market—one of the biggest consumers of semiconductor chips—continues to grow. At the same time, the automotive sector is witnessing an increasing adoption of chips into the vehicles.

Bolstered by the positive growth sentiments, semiconductor companies are getting ready for new opportunities of growth. For one, the government’s resolve to modernise the three wings of its armed forces—army, navy and air force—by investing vast sums of money in the latest armoury, could be a money-spinner for the semiconductor industry. Other than that, WiMax, 3G, DTH, medical electronics, photovoltaic and nanotechnology are some of the growth areas over the next few years.

Rural opportunities spawned by cheaper handsets, affordable services and enhanced connectivity have resulted in millions of subscribers across India. This price reduction can be attributed to smarter semiconductor components, coupled with efficient manufacturing techniques. No wonder, there is an opportunity for the semiconductor industry as the investment in urbanising India stands at around $500 billion.