# Computers and electronics and Semiconductors

Chips are the largest single input to phones, PCs and servers, and those devices in turn buy most of the world's chips. A swing in chip prices, above all memory, moves device costs within a quarter, and India's push to assemble devices under PLI is now being followed by subsidies to make the chips themselves.

Source page: https://www.materialinsights.org/links/computers-and-electronics-and-semiconductors/

[Computers and electronics](https://www.materialinsights.org/industries/computers_electronics/) (industry) and [Semiconductors](https://www.materialinsights.org/industries/semiconductors/) (industry): 5 relationships.

## How they are linked

### 1. Buys from

*Physical flow · ₹25.2 per ₹100 · Computers and electronics buys from Semiconductors*

Every electronic product is built around processors, memory, power and radio chips, so chipmakers are the largest supplier to device makers.

- **₹25.2** of every ₹100 of Computers and electronics output, all rounds (India 2022)
- **₹19.7** bought directly

About a quarter of the value of Indian electronics output goes to chips once indirect purchases are counted, and most of that is imported because India has no volume chip production yet. Monthly price indices move only loosely together (correlation about minus 0.17 on India WPI, minus 0.15 over 12 months), because device prices are set by brands and product cycles while chip prices swing with inventory.

Sources: [OECD](https://www.oecd.org/en/data/datasets/input-output-tables.html); [Material Insights (World Bank, FRED, IMF data)](https://www.materialinsights.org/industries/semiconductors/price-links/)

### 2. Industry input

*Physical flow · Criticality 5 of 5 · Semiconductors to Computers and electronics*

Three of the enterprise types in Computers and electronics depend on semiconductors: chip and memory suppliers, display and battery-cell makers that need driver chips, and device brands whose designs follow chip roadmaps.

A device brand cannot switch its main processor or memory supplier within a product cycle, so a shortage or allocation by a chipmaker stops the assembly line rather than raising its cost slightly. This is why the dependence is rated at the top of the scale.

Enterprise types that depend on it:

- Chip and memory suppliers: the whole chip value chain sits upstream (criticality 5 of 5)
- Display and battery-cell makers: display driver chips (criticality 4 of 5)
- Device brands (OEMs): chip roadmaps set product design (criticality 4 of 5)

Sources: [Material Insights](https://www.materialinsights.org/industries/computers_electronics/)

### 3. Main chip customer

*Transition · Strong · Device demand drives chip sales*

PCs, servers, phones and network gear are the largest end market for chips, so device shipments set much of the semiconductor cycle.

- **US$ 527 billion** world chip sales, 2023
- **25%** share of 2023 chip sales going to PCs and computers
- **about 57%** share going to computing and communications together, 2023 (SIA estimate)

SIA puts PCs and computers at 25% of 2023 chip sales, with communications gaining share; its factbook estimates, as reproduced by Statista, put computing and communications together at about 57%, against about 17% for automotive and 14% for industrial. A slowdown in phone and PC shipments therefore shows up quickly as chip inventory and price cuts, although the link is weaker when server demand is strong.

Sources: [Semiconductor Industry Association](https://www.semiconductors.org/?p=26593); [Statista](https://www.statista.com/chart/amp/32665/share-of-semiconductor-sales-by-end-market-usage)

### 4. Memory cost pass-through

*Cost and price · Strong · Chip prices into device costs*

Memory is a large slice of a device's bill of materials and is priced on short contracts, so memory price spikes reach device costs and retail prices within a quarter or two.

- **up to 43%** memory share of bill of materials, entry-level smartphones, Q1 2026
- **50% and 90%** quarterly rise in DRAM and NAND prices, Q1 2026

Counterpoint estimated that the Q1 2026 memory price rises lifted the cost of an entry-level phone by about 25% if other parts were unchanged, and expected retail price rises of about US$ 30 for entry models and US$ 150 to 200 for premium flagships. Entry-level models, where memory is the largest share of cost, are hit hardest, which matters in price-sensitive markets such as India.

Sources: [The Asia Business Daily (Counterpoint Research data)](https://www.asiae.co.kr/en/article/2026031116170852169)

### 5. PLI and chip mission

*Policy · High in India · India subsidises both*

India first paid incentives for device assembly and is now subsidising chip fabs and packaging plants, aiming to capture the chip value that assembly alone leaves abroad.

- **₹8.12 lakh crore** mobile production under the PLI scheme, to February 2026
- **₹1.60 lakh crore** investment in 10 approved chip projects, December 2025

Mobile PLI drew ₹17,519 crore of investment, more than twice its target, and smartphone exports reached ₹2.62 lakh crore in 2025, with ₹15,473 crore of incentives paid. The India Semiconductor Mission backs fabs and packaging units with a ₹76,000 crore incentive framework, including the Tata and PSMC fab in Gujarat planned at about 50,000 wafer starts a month; India's chip market was put at US$ 45 to 50 billion in 2024-25 and is projected at US$ 100 to 110 billion by 2030. By June 2026 approvals had reached 12 projects worth about ₹1.64 lakh crore, of which nine are packaging units.

Sources: [Daily Excelsior (PTI)](https://www.dailyexcelsior.com/mobile-pli-investments-up-twofold-at-rs-17519-cr-smartphone-exports-cross-rs-2-62-lakh-cr-in-2025/); [Press Information Bureau, Government of India](https://static.pib.gov.in/WriteReadData/specificdocs/documents/2026/feb/doc202627782201.pdf); [Telangana Today](https://telanganatoday.com/india-approves-12-semiconductor-projects-with-rs-1-64-lakh-crore-investment-pipeline)

## For investors

### Key learnings

1. Chips are about a quarter of the value of Indian electronics output once all supply rounds are counted, so chip pricing matters more to device margins than assembly costs.
2. Memory is the most volatile part of the chip bill, and in 2026 it pushed entry-level phone costs up by about a quarter, hurting low-price brands most.
3. Because PCs, phones and network gear take most of world chip sales, their shipments are an early signal for the chip cycle outside AI servers.

### What to track

- **DRAM and NAND contract prices**: Rising prices squeeze device makers' margins and force price rises (Monthly · TrendForce, Counterpoint)
- **Smartphone and PC shipments**: Weak shipments lead chip inventory build and price cuts (Quarterly · IDC, Counterpoint)
- **World chip sales by end market**: Shows how far devices still drive chip demand against AI servers (Monthly · WSTS, SIA)

## For policymakers

### Key learnings

1. PLI has made India a large phone assembler and exporter, but most of the chip value in each device is still imported.
2. Chip subsidies under the India Semiconductor Mission are the next step, yet approved projects are mostly packaging units, which add less value than fabs.
3. A memory price spike raises the cost of phones for Indian buyers and can slow digital adoption, a link to watch in consumer and digital policy.

### What to track

- **Electronics imports of integrated circuits**: Shows how much device growth still depends on imported chips (Monthly · DGCI&S)
- **ISM project approvals and start of production**: Signals when domestic chip supply begins to replace imports (As announced · MeitY, PIB)
- **PLI production, exports and incentives paid**: Measures whether assembly gains continue as incentives taper (Quarterly · MeitY, Parliament replies)

## India

India assembles and exports phones at scale under PLI (₹2.62 lakh crore of smartphone exports in 2025) but imports almost all the chips inside them; 12 approved chip projects worth about ₹1.64 lakh crore by June 2026, nine of them packaging units, are meant to start closing that gap.

## Sources

1. [OECD Input-Output Tables 2025 edition, India 2022](https://www.oecd.org/en/data/datasets/input-output-tables.html), OECD
2. [Price correlation, Material Insights](https://www.materialinsights.org/industries/semiconductors/price-links/), Material Insights (World Bank, FRED, IMF data)
3. [Industry map: Computers and electronics](https://www.materialinsights.org/industries/computers_electronics/), Material Insights (2026)
4. [AI, auto, industrial markets spurred rebound in chip demand during second half of 2023](https://www.semiconductors.org/?p=26593), Semiconductor Industry Association (2024)
5. [Smartphone price hikes not over yet: memory now accounts for half of manufacturing costs](https://www.asiae.co.kr/en/article/2026031116170852169), The Asia Business Daily (Counterpoint Research data) (2026)
6. [Mobile PLI investments up twofold at Rs 17,519 cr, smartphone exports cross Rs 2.62 lakh cr in 2025](https://www.dailyexcelsior.com/mobile-pli-investments-up-twofold-at-rs-17519-cr-smartphone-exports-cross-rs-2-62-lakh-cr-in-2025/), Daily Excelsior (PTI) (2026)
7. [India Semiconductor Mission backgrounder](https://static.pib.gov.in/WriteReadData/specificdocs/documents/2026/feb/doc202627782201.pdf), Press Information Bureau, Government of India (2026)
8. [India approves 12 semiconductor projects with Rs 1.64 lakh crore investment pipeline](https://telanganatoday.com/india-approves-12-semiconductor-projects-with-rs-1-64-lakh-crore-investment-pipeline), Telangana Today (2026)
9. [Semiconductor use cases: share of sales by end market (SIA 2024 Factbook data)](https://www.statista.com/chart/amp/32665/share-of-semiconductor-sales-by-end-market-usage), Statista (2024)