Request ConsultationIndia is rapidly building its semiconductor manufacturing ecosystem through government support, global investments, new fabs, and advanced packaging projects. The country is strengthening chip design, production, AI capabilities, and skilled talent to reduce import dependence and expand its role in the global chip industry.
The semiconductor industry is the backbone of modern technology, as it helps fuel innovation across various sectors spanning all the way from consumer electronics to electric vehicles, telecommunications, and even artificial intelligence. As global supply chains continue to shift and the demand for chips rises, India is strategically positioning itself as the next semiconductor powerhouse.
With robust government policies, growing international collaborations, and rising domestic demand, India’s semiconductor industry is expected to grow significantly in recent years. In 2026, India is witnessing strong semiconductor manufacturing growth in India. Real factories are starting production, creating jobs, and reducing dependence on foreign supplies. This India chip boom feels like the perfect moment because global companies want reliable new partners, and India has talent, policy support, and growing local demand.
This is especially timely because SEMICON India 2026 is happening now, with more than 600 companies participating, Applied Materials announcing a planned $5 billion India investment, and the government reporting $11-12 billion of investment interest under Semicon 2.0.
What are Semiconductors?
Semiconductors control the flow of electricity in devices. Without them, there would be no fast phones, electric vehicles (EVs), AI tools, or modern defense systems. India uses billions of these chips every year. Earlier, almost all were imported. Now, in recent times, the focus has shifted to making them locally, from design to final packaging.
Semiconductors play an important role in powering smartphones, computers, and cutting-edge medical devices. Acknowledging their strategic importance, India has rolled out several initiatives in recent years in order to bolster domestic semiconductor manufacturing. The sector is also expected to require one million skilled professionals across fields like chip fabrication, assembly, testing, packaging (ATMP), design, software development, and supply chain management. India’s Semiconductor Mission (ISM) is pivotal to this transformation.
Why India Is Entering the Global Semiconductor Race
India’s semiconductor push is no longer just an industrial policy experiment. It is rapidly becoming one of the most consequential economic and geopolitical transformations in the country’s post-liberalization history.
What appears as a manufacturing initiative is, in reality, a far deeper strategic revolution, one that is designed to reposition India from a technology-consuming economy into a more advanced, globally integrated electronics, semiconductor, AI, defense-tech, and digital infrastructure power.
The global semiconductor industry has now become the foundation layer of modern civilization. From AI servers, EVs, smartphones, telecom systems, satellites, and defense electronics to renewable energy infrastructure and industrial automation, semiconductors determine economic competitiveness, national security, and technological sovereignty.
India currently imports the overwhelming majority of its semiconductor requirements, particularly for smartphones, telecom systems, automotive electronics, industrial equipment, AI servers, consumer electronics, and defense systems.
This import dependence creates both:
- A strategic vulnerability
- A massive domestic manufacturing opportunity
Two key structural shifts are benefiting India in the current landscape. First, geopolitics is driving global supply chains to diversify, and companies seek alternatives to relying on a single country. Second, cost arbitrage in engineering talent, given India’s large pool of chip designers, makes design and supporting manufacturing more competitive here than in many developed nations. This blend of politics, talent, and incentives creates a real opportunity window. Semiconductor capability develops gradually over 15–20 years, so success depends on building layered expertise over time, not just a single announcement or subsidy.
Currently, the world is engaged in a 'semiconductor war,' with major powers like the US and China vying for dominance in chip manufacturing, which is the core of modern technology across industries. Control over chip production equals control over future technological leadership. India, heavily dependent on imports from Taiwan, South Korea, China, and the US, faces notable risks if geopolitical tensions disrupt supplies, threatening critical sectors like electronics, automotive, and defense. This is prompting India to develop a strong domestic semiconductor ecosystem.
The goal is not only to cut dependence on imports but also to safeguard national security, stimulate economic growth, and boost technological capacity. To support this, the government has implemented specialized policies, partnered with global firms, and increased R&D investments, resulting in three new semiconductor plants: two in Gujarat and one in Assam, with Tata Group leading these initiatives.
Why This Is Beneficial
The importance of semiconductors is quite significant. Today, nearly every modern industry relies on chips, from consumer electronics to the defense sector. During the Covid19 pandemic, the world saw the consequences of a global chip shortage, where car production slowed down, electronics manufacturing faced delays, and entire industries were at risk of grinding to a halt.
India’s growing electronics, automotive, and defense industries were also directly impacted by these shortages, which is why building a domestic semiconductor manufacturing ecosystem is critical. India’s push to establish a self-sufficient semiconductor supply chain is expected to position the country as a significant player in the global market.
India's Semiconductor and China +1 Strategy
India's semiconductor strategy is part of the broader China+1 initiative, which helps encourage global companies to diversify their supply chains and manufacturing activities away from China. This strategy is further being driven by geopolitical and geoeconomic uncertainties, particularly in the context of rising labor costs and the need for supply chain resilience.
India's strategy is not just about diversification but also about building a domestic semiconductor ecosystem that can compete with global leaders like the US and China. The country's ambitions include achieving chip parity with these nations by 2032, supported by a $10 billion incentive program aimed at building large-scale manufacturing, assembly, and design capabilities.
What Is Semicon 2.0?
Semicon 2.0 is the next phase of India’s semiconductor mission. It is designed to support every important part of the semiconductor value chain, all the way from chip design to manufacturing and skilled workforce development.
The main objective is to build resilient, trusted, and sovereign semiconductor technologies by focusing on the design, development, and deployment of target segment technologies for the national strategic and critical infrastructure.
- Chip Design: The government will strengthen India’s chip design ecosystem by supporting startups and developing Indian intellectual property (IP). The focus will be on designing complete semiconductor chips and systems, helping India become a global center for semiconductor design.
- Semiconductor Machines and Materials: Companies manufacturing semiconductor equipment, chemicals, gases, and raw materials will receive incentives. This will help create a stronger domestic supply chain and reduce dependence on imports.
- More Semiconductor Fabs: India plans to attract additional semiconductor fabrication plants (fabs), including silicon fabs, compound semiconductor fabs, display fabs, and discrete component fabs. The first semiconductor fab is expected to begin operations in 2028.
- Stronger ATMP/OSAT Industry: The policy will further strengthen India’s Assembly, Testing, Marking and Packaging (ATMP/OSAT) sector. The government aims to attract advanced packaging technologies as global companies look for alternative manufacturing locations.
- Research and Development: Semicon 2.0 will help to encourage advanced semiconductor research beyond the current 28nm-110nm technology. Indian institutions will work with leading research centers in India and abroad to develop next-generation semiconductor technologies.
- Talent Development: Around 315 universities are already training students using industry-standard Electronic Design Automation (EDA) tools. More focus will be given to clean room training, fab construction skills, and advanced semiconductor education to prepare a skilled workforce.
What is the Importance of Semicon 2.0?
Semiconductors are the backbone of smartphones, computers, electric vehicles, telecom equipment, defense systems, medical devices, and artificial intelligence.
A strong domestic semiconductor industry will improve India’s manufacturing capability, strengthen national security, create high-quality jobs, and reduce reliance on imported chips. It will also support the country’s long-term vision of becoming a global technology and electronics manufacturing hub.
What changes under this?
- Supply Chain Localization: Encouraging domestic production of specialized materials and equipment
- Design-Led Growth: Supporting fabless companies and Indian IP creation
- R&D and Skilling: Expanding focus beyond capital expenditure
India’s Semiconductor Projects
Front End Projects:
- First India fab, announced 29th Feb 2024: Tata Electronics and PSMC, Taiwan
Operational by the end of 2026.
Will be capable of 28-, 40-, 55-, and 110-nanometer chip production, with a capacity of 50,000 wafers per month. This will be in Dholera, Gujarat. Investment in this fab will be about $ 11 billion.
Far from the cutting edge, these technology nodes nevertheless are used in the bulk of chipmaking, with 28 nm being the most advanced node using planar CMOS transistors instead of the more advanced FinFET devices. Segments covered include high-performance compute chips with 28 nm technology and power management chips.
- Second India fab, announced 12th Aug 2025: SiCSem Pvt Ltd
Operational by 2027-28
India’s first commercial compound semiconductor fab. The silicon carbide semiconductor plant will be set up in Bhubaneswar, Odisha, with an investment of Rs 2,066 crore ($ 235 million). It will have the capacity of 60,000 wafers/year and 96 million packaged units annually. Applications include defense systems, EVs, railways, fast chargers, solar inverters, etc.
- Integrated fab and ATMP facility, announced 5th May 2026: Crystal Matrix Limited
Operational by 2029
An integrated compound semiconductor fabrication and ATMP facility in Dholera, Gujarat. The facility will manufacture Mini/Micro-LED display modules and also provide GaN foundry services, including epitaxy on 6" wafers. Its annual production capacity will be 72,000 sq.m. of Mini/Micro-LED display panels and 24,000 sets of RGB GaN epitaxy wafers.
Back End Projects
- Micron’s DRAM and NAND assembly and test facility.
Operational as of 28th February 2026
Location: Sanand, Gujarat. Investment of about $2.75 billion over two phases. The state-of-the-art facility converts advanced DRAM and NAND wafers from Micron's global manufacturing network into finished memory and storage products. Once fully ramped, the first phase of Micron’s Sanand operation will feature more than 500,000 square feet of cleanroom space, making it one of the world’s largest single-floor assembly and test cleanrooms. The Sanand site is ISO 9001:2015 certified and has begun commercial production. To mark the grand opening of the site, Micron presented its first shipment of made-in-India memory modules to Dell Technologies for its laptops made in India for India. Micron expects to assemble and test tens of millions of chips at Sanand in 2026, scaling to hundreds of millions in 2027.
- Semiconductor ATMP unit in Assam
Operational by early 2026
Tata Semiconductor Assembly and Test Pvt Ltd ("TSAT") will set up a semiconductor unit in Morigaon, Assam. This unit will be set up with an investment of $ 3.2 billion. TSAT Semiconductor is developing indigenous advanced semiconductor packaging technologies, including flip chip and ISIP (integrated system in package) technologies. Capacity is 48 million per day.
- Semiconductor ATMP unit for specialized chips
Operational by 2027
CG Power, in partnership with Renesas Electronics Corporation, Japan, and Stars Microelectronics, Thailand, will set up a semiconductor unit in Sanand, Gujarat. This unit will be set up with an investment of about $ 1 billion. The unit will manufacture chips for consumer, industrial, automotive, and power applications and will have a capacity of 15 million per day.
- Semiconductor ATMP unit for specialized chips
Operational by 2027
Kaynes Semicon will set up a semiconductor unit in Sanand, Gujarat. Their initial plans for a unit in Tamil Nadu were supported by ISM. This unit will be set up with an investment of about $ 413 million. The unit will manufacture chips for the domestic (30%) as well as the international market (70%) and will have a capacity of 6 million per day. They plan to have about 13 chip assembly and test lines.
India’s Advanced Semiconductor Packaging Opportunity
India is also poised to become a global hub for semiconductor packaging, driven by its strong design capabilities and government initiatives. The country has recognized the importance of packaging as a critical step in semiconductor manufacturing, moving beyond just fabrication. The Indian government has approved 10 semiconductor projects across six states under the India Semiconductor Mission, with a total investment of ₹1.60 lakh crore.
These projects include advanced packaging facilities, which are expected to play a significant role in India's semiconductor value chain. This growth is further being supported by the rising adoption of electronic devices, increasing focus on wafer-level packages, and growing investments being made in semiconductor packaging technologies.
India's roadmap has a strong focus on advanced packaging, compound semiconductors, and talent development. This aims to reduce India's dependence on imported semiconductor technologies while building deeper capabilities across design, manufacturing, packaging, research, and ecosystem development. The strategic focus on advanced packaging is also expected to bridge India's design strength and manufacturing ambitions, thus positioning the country as an emerging packaging, ATMP, and OSAT node.
In addition to that, the India Semiconductor Mission is supporting silicon fabrication, silicon carbide fabs, advanced and memory packaging facilities, and specialized assembly and testing infrastructure. Global semiconductor companies are also expanding their presence in India, further reinforcing the country's semiconductor design and engineering base.
AI and the Indian Semiconductor Opportunity
AI solutions are helping design firms navigate the intricate design process with remarkable precision and reduce design and R&D costs, while also simultaneously improving time-to-market performance. By leveraging its deep talent pool in artificial intelligence, India can excel in developing custom design solutions tailored to domestic use cases, driving innovation across sectors like healthcare, agriculture, and smart infrastructure. Simultaneously, quantum technologies offer transformative potential in solving India’s complex challenges, from secure communications to advanced simulations in climate and energy. This will, however, require building capabilities in the design of quantum processors, classical control systems, and co-designed quantum architecture. Additionally, power-aware design and modular design are domains that are set to open up numerous opportunities.
The IndiaAI Mission, approved with an outlay of about ₹10,372 crore, has made significant strides over the past year. The Mission`s ambition is focused on building capabilities that are secure, inclusive and rooted in Indian needs. It aims to make AI a strategic capability for innovation, economic growth, and public service delivery.
- AI adoption is expanding rapidly in defense, healthcare, finance, and education, with Indian startups developing cutting-edge solutions.
- Collaborations with the U.S., EU, and Singapore are accelerating AI innovation and global integration.
- Government funding and policies are boosting patents, products, and automation adoption.
- Moderate risks include cyberattacks, talent poaching, and international AI competition.
- India is positioned to become a specialized AI innovation hub by 2027.
By 2027, India is set to become a regional leader in semiconductors and Artificial Intelligence (AI), attracting investments, nurturing talent, and influencing global tech standards. With proactive strategies, India is set to manage risks from cyber threats, trade competition, and geopolitical pressures while driving sustainable growth and innovation in these high-impact sectors.
India’s Existing Strengths and Key Players
While India has struggled with semiconductor fabrication, which is the physical production of chips, it has already built a strong semiconductor design ecosystem. Indian companies like TCS, Wipro, and HCL have been actively involved in designing chips for decades. This new push is focused on bridging the gap between design and fabrication, creating the necessary infrastructure to produce chips locally.
Big industry players are also eyeing India’s semiconductor market. Companies like Bat Forge are focusing on niche semiconductor segments related to automotive and defense industries. India is not attempting to compete directly with established semiconductor powerhouses like Taiwan or the U.S. Instead, it is targeting specific markets where it can have a significant impact, such as automotive, mobile, and defense semiconductors.
India’s Semiconductor Future: Competition with Taiwan, South Korea, and the U.S.
India’s semiconductor aspirations are ambitious, and the government’s vision is to achieve in 10 years what China accomplished in 30 years. The goal is to become a major player in the global semiconductor market, but challenges remain. Competing with established giants like Taiwan, South Korea, and the U.S. is not an easy task, as these countries have decades of experience and cutting-edge technology in semiconductor production. However, India’s focus on strategic investments, industry collaboration, and policy support puts it in a strong position to stand out and carve out its niche.
India will need to focus on creating a competitive, sustainable semiconductor ecosystem, improving manufacturing capabilities, and attracting further investments. With the right policies and industry engagement, India can build a semiconductor industry that supports not only its own needs but also positions it as a key player in the global tech race.
What are the Challenges Faced?
- Technological Complexities Acting as a Barrier to Advancement: The chip design process has become increasingly complex due to the rise of AI applications, which demand compute-intensive chips to power GPUs and high-performance computing systems. High licensing costs of EDA tools and their steep learning curves limit the ability of small firms to scale innovation by depriving them of access to critical design infrastructure.
- Talent Scarcity: Intricate Tasks Require Specialized Skills: Integration of smaller, specialized chiplets into a single package using 3D stacking or interposers enables functional heterogeneity. Semiconductor manufacturing processes. Lithography, which transfers complex design patterns just nanometers in size onto a silicon wafer, requires an extremely high-level of precision, as even slight deviations in the pattern will render chips useless. Similarly, it is critically important to precisely remove materials from the wafer to create a designed structure, as this process is key to achieving desired performance and speed. Both processes require highly specialized engineers and technicians.
- High Resource Requirement Drives Up Operating Costs: The semiconductor manufacturing process is exceptionally energy-intensive, as it requires substantial, uninterrupted power to heat silicon, run lithography tools, and sustain cleanroom environments. It is estimated that the overall power consumption of the global semiconductor industry is equivalent to around 0.3 percent of the world’s electricity use. Manufacturing semiconductors also requires thousands of gallons of high-grade water, which is primarily used across different phases to remove residual chemicals and contaminants from the wafer surface, among others. Advanced filtration and recycling systems are necessary to generate water with the required purity levels, which not only adds to process intricacy but also increases operational costs.
- Securing Acceptance for Made-in-India Chips: The global semiconductor supply chain is highly specialized, with a clear division of activities among a handful of countries depending upon their respective strengths. Suppliers from East Asian nations have built strong trust with these ODMs due to decades of their efforts to attain volume reliability and technical performance, which led to entrenched relationships. For India to entrench itself in this ecosystem, it will require India-made chips to meet rigorous global standards and performance benchmarks, which will take time and sustained efforts.
Final Thoughts
India’s semiconductor push is just beginning, but it is already clear that the country’s future in chip manufacturing is promising. By 2025, India will have its first homegrown semiconductor chip, and over the next decade, it could become a global semiconductor powerhouse. With continued government support, strategic investments, and industry partnerships, India is well on its way to reducing its dependency on imports and playing a significant role in shaping the global semiconductor landscape.
The future of India’s technology and electronics industries hinges on the success of this semiconductor push, and if all goes as planned, the country could soon join the ranks of global semiconductor leaders.
About the Authors
Aditi Shivarkar
Aditi, Vice President at Precedence Research, brings over 15 years of expertise at the intersection of technology, innovation, and strategic market intelligence. A visionary leader, she excels in transforming complex data into actionable insights that empower businesses to thrive in dynamic markets. Her leadership combines analytical precision with forward-thinking strategy, driving measurable growth, competitive advantage, and lasting impact across industries.
Aman Singh
Aman Singh with over 13 years of progressive expertise at the intersection of technology, innovation, and strategic market intelligence, Aman Singh stands as a leading authority in global research and consulting. Renowned for his ability to decode complex technological transformations, he provides forward-looking insights that drive strategic decision-making. At Precedence Research, Aman leads a global team of analysts, fostering a culture of research excellence, analytical precision, and visionary thinking.
Piyush Pawar
Piyush Pawar brings over a decade of experience as Senior Manager, Sales & Business Growth, acting as the essential liaison between clients and our research authors. He translates sophisticated insights into practical strategies, ensuring client objectives are met with precision. Piyush’s expertise in market dynamics, relationship management, and strategic execution enables organizations to leverage intelligence effectively, achieving operational excellence, innovation, and sustained growth.