Silicon carbide gold rush: Can India seize the $14.7 billion chip opportunity?

India’s semiconductor mission, envisioned to transform the nation into a global hub for chip manufacturing, stands at a critical juncture. While silicon has long been the backbone of the semiconductor industry, the emergence of silicon carbide (SiC) as a next-generation material presents India with a unique opportunity to carve out a high-value niche.

Renowned for its superior efficiency, durability in high-temperature environments, and ability to handle high-voltage applications, SiC is rapidly gaining traction in power electronics, electric vehicles (EVs), and renewable energy. Yet, the global SiC market remains concentrated among a handful of players.

"STMicroelectronics and Infineon are currently leading the SiC market globally, with other key players like onsemi, ROHM, Wolfspeed, Mitsubishi Electric, Fuji Electric, GeneSiC, and Toshiba also making significant contributions. These companies dominate power modules and EV applications, which account for more than 75% of SiC usage," says Ashwath Rao, Senior Analyst at Counterpoint Research.

With soaring global demand and limited supply, India is well-positioned to seize this opportunity and propel its semiconductor ambitions forward.

The Geopolitical Struggle for SiC

The numbers tell a compelling story. The global market for SiC-based power semiconductors is projected to grow from $3.9 billion in 2024 to $14.7 billion by 2030, marking nearly a fourfold surge in just six years, according to Fab Economics Mobility Research.

Electric vehicles alone drive over 75% of this demand, with SiC chips extending vehicle range, reducing charging times, and lowering overall semiconductor requirements. McKinsey estimates that by 2027, over 50% of battery electric vehicles (BEVs) could rely on SiC powertrains—up from 30% today.

However, the SiC race is also a geopolitical one.

"The US, EU, and Japan dominate SiC semiconductor production, but China has strategically increased silicon carbide bare wafer production to alarming levels between 2023 and 2024, reaching nearly 50% of global supply by leveraging government sponsorship and subsidy policies," explains Danish Faruqui, CEO of Fab Economics, a US-based semiconductor advisory firm. "China is also the largest consumer, accounting for over half of the global demand for silicon carbide-based power device semiconductors."

The US administration, through the CHIPS Act, has extended subsidies to domestic producers, including Bosch ($575 million in combined subsidies and loans), X-Fab ($50 million), and Coherent ($48 million). Meanwhile, China is projected to quadruple its silicon carbide substrate production capacity over the next two years, maintaining a rapid expansion pace.

Bharat Kapoor, partner and global lead at PERLab, a strategy consultancy at Kearney, argues that China’s dominance is not as overwhelming as it seems. "Currently, only around 10% of exclusive SiC fabrication is in China, with 70% of manufacturing happening in Japan, Europe, and the US. This, he suggests, creates a window for India to provide cost-competitive SiC solutions compared to high-cost regions."

India’s SiC Leap

India is following the global trends led by Japan, China, and the US, with domestic players actively exploring investments in silicon carbide semiconductor technology.

"The SiC market in India is expected to grow at a CAGR of 15.6% from 2022 to 2030, driven by its increasing footprint in EVs, data centers, power electronics, defence, and aerospace. India is already a major player in the EV segment and has a booming market for data centers and 5G communication. Given these factors, SiC has strong growth potential in India," says Kapoor at Kearney. "The combination of rising demand and India's status as a geopolitically neutral manufacturing base presents an opportunity for both SiC bare wafer production and SiC power semiconductor devices."

Since the launch of the Semicon India Programme in December 2021, several Indian companies have entered the SiC space. While the Tata Group is setting up a silicon semiconductor fab, others are focusing specifically on SiC manufacturing.

Chennai-based Zoho, traditionally known for its software expertise, has announced plans to establish a silicon carbide chip manufacturing plant in Tamil Nadu and is awaiting government subsidy approvals. Indichip Semiconductors has unveiled a ₹14,000 crore investment plan to set up a SiC fab in Andhra Pradesh in partnership with Japan’s Yitoa Micro Technology Corporation, aiming to serve both domestic and global markets. Similarly, Ruttonsha International Rectifier (RIR) began construction on its silicon carbide manufacturing facility at EMC Park, Bhubaneswar, in September 2024.

Recognizing SiC’s strategic importance; the Indian government has also taken proactive steps. In September 2024, as part of a strategic partnership between the US and India, Prime Minister Narendra Modi and President Joe Biden agreed to establish a semiconductor fabrication plant focused on advanced sensing, communication, and power electronics for national security, next-generation telecommunications, and green energy applications. Supported by the India Semiconductor Mission, this plant will produce infrared, gallium nitride, and SiC semiconductors in collaboration with Bharat Semi, 3rdiTech, and the US Space Force.

Cost-effectiveness is a key driver for India’s interest in SiC.

"It will cost only a fraction to build and operate an equivalent capacity SiC-based power semiconductor fabrication facility, with project costs ranging from $1–5 billion based on capacity, wafer size, and technology generation. The overlap between manufacturing process requirements for silicon carbide and traditional silicon semiconductor fabs varies widely across technologies. Depending on the generation, the overlap could be as low as 30%, with direct/indirect manufacturing materials and equipment requirements even lower," says Faruqui.

Kathir Thandavarayan, Partner at Deloitte India, notes that the capital investment in setting up a SiC fab depends on product portfolio, technology, value chain coverage, and capacity considerations. "An end-to-end facility covering design to devices with a minimal competitive capacity could be set up with an investment of $400–500 million," he estimates.

Despite the government’s 50% incentives on a pari-passu basis for silicon carbide fabs, industry experts believe a tailored approach is essential to address the unique ecosystem, cost dynamics, and geopolitical challenges associated with SiC manufacturing.

Ambitious but Risky

While investments in SiC fabs are pouring in, some industry leaders urge caution. Ajai Chowdhry, founder of HCL and chairman of the EPIC Foundation & MGB at the National Quantum Mission of India, believes that setting up SiC fabs without strategic partnerships with global leaders could lead to suboptimal outcomes.

"Silicon carbide is a relatively new and complex technology. Achieving high yield and optimal performance is challenging even for seasoned players. Currently, only three companies—STMicroelectronics, Onsemi, and Infineon—possess the advanced technology and expertise required for successful SiC chip manufacturing," Chowdhry explains.

He warns that if India pursues partnerships with lesser-known entities under the India Semiconductor Mission, it risks wasting public funds on ventures that may not deliver results. "Given that the Indian market accounts for just 2% of global semiconductor consumption, India should focus on attracting one of the top global players rather than spreading resources thin by supporting multiple smaller players."

The SiC semiconductor industry also faces significant technical challenges. Manish Rawat, Semiconductor Analyst at TechInsights, highlights the difficulty of sourcing high-purity SiC crystals, as producing boules with fewer defects directly impacts yield and performance. "Additionally, SiC semiconductors require advanced materials that can withstand extreme conditions, making the manufacturing process expensive and highly specialized."

Scaling production with larger SiC wafers is another hurdle. "Growing large-diameter wafers with minimal defects is critical to enhancing manufacturing capacity. Without access to cutting-edge facilities and logistical support, it becomes difficult to remain competitive on a global scale," Rawat adds.

If India can strategically navigate these challenges, secure partnerships with established global players like STMicroelectronics and Infineon and offer competitive capital expenditure and production-linked incentives, it has the potential to establish itself as a significant player in the $14.7 billion SiC chip market by the end of the decade.