India ramps up semiconductor ambitions with $13.2 billion strategy
. . . to reduce global reliance on Taiwan
India is investing billions of dollars to build a domestic semiconductor industry as countries seek to diversify global chip supply chains beyond Taiwan. Backed by government incentives and growing private investment, New Delhi aims to become a major player in semiconductor manufacturing by 2030.
If India succeeds in building a reliable manufacturing ecosystem, it could emerge as an important alternative production base in the global semiconductor industry, helping diversify supply chains beyond Taiwan while strengthening its own technology sector and economic growth.
India is stepping up efforts to establish itself as a global semiconductor manufacturing hub, seeking to reduce the world’s dependence on Taiwan, which currently produces more than 90% of the world’s most advanced semiconductor chips.
The push comes as governments and technology companies work to diversify global supply chains following disruptions during the COVID-19 pandemic and amid rising geopolitical tensions surrounding Taiwan.
Semiconductor chips are essential components in products ranging from smartphones and electric vehicles to aircraft, artificial intelligence systems and defense equipment.
To strengthen its position, the Indian government has approved Semicon 2.0, a $13.2 billion program that expands on the $9 billion India Semiconductor Mission (ISM) launched in 2021.
Together, the initiatives aim to build a complete semiconductor ecosystem, covering chip design, fabrication, advanced packaging, specialty materials, manufacturing equipment and workforce development.
India has also offered more than $13 billion in financial incentives to encourage domestic chip production and attract global manufacturers.
Strong in Chip Design, Weak in Manufacturing
India already plays an important role in semiconductor design. Thousands of engineers employed by global technology companies including Nvidia, AMD, Qualcomm and Texas Instruments develop advanced chips from research centers in Bengaluru, Hyderabad and Noida.
However, experts say the country still lacks large-scale manufacturing capacity, which represents the most valuable and strategically important part of the semiconductor supply chain.
According to V. Kamakoti, Director of the Indian Institute of Technology Madras, India has demonstrated strong capabilities in chip design but now faces the challenge of building domestic fabrication facilities capable of producing semiconductors on a commercial scale.
So far, India’s progress has been strongest in semiconductor packaging and testing rather than chip fabrication.
Industry Begins to Take Shape
Several companies have already begun operations under the first phase of India’s semiconductor programme. US-based Micron Technology, along with Indian firms Kaynes Semicon and CG Semi, has started commercial production of semiconductor assembly and testing facilities.
The government says 12 semiconductor fabrication and packaging projects have been approved, with three already in commercial production. Officials believe growing investor confidence is making it easier to attract international semiconductor companies to India.
India aims to build a domestic semiconductor market worth $100 billion to $110 billion by 2030, while meeting up to 75% of the country’s electronics demand through locally designed and manufactured chips.
Building a Competitive Chip Industry
Despite the momentum, establishing a globally competitive semiconductor manufacturing industry remains a significant challenge.
A state-of-the-art semiconductor fabrication plant can cost more than $20 billion and requires highly reliable electricity, vast quantities of ultra-pure water and an extensive network of suppliers producing silicon wafers, specialty chemicals and precision manufacturing equipment.
Industry experts believe India should initially focus on producing 28-nanometre chips, which are widely used in automobiles, industrial equipment and consumer electronics, before moving into advanced technologies such as 3-nanometre chips used in premium smartphones and artificial intelligence applications.
If India succeeds in building a reliable manufacturing ecosystem, it could emerge as an important alternative production base in the global semiconductor industry, helping diversify supply chains beyond Taiwan while strengthening its own technology sector and economic growth.
