By: Shridhar Pandey | Director and CTO | Nodiot Innovations Private Limited
Semiconductors are the invisible engines of the modern economy. From smartphones, electric vehicles and smart meters to artificial intelligence, telecommunications, medical equipment, industrial automation, defense systems and satellites, nearly every advanced technology depends on semiconductor chips.
For decades, India has been recognized worldwide for software capabilities and semiconductor design capabilities. But much of the physical production of chips used by Indian industries has been done outside the country. This is starting to change now.
With major government intervention, private investment, international technology partnerships, and rapid expansion of the domestic electronics market, India is building a semiconductor ecosystem that goes beyond chip design and intellectual property to include wafer fabrication, compound semiconductors, assembly, advanced packaging, testing, equipment, and materials.
As of mid 2026, the Government has approved 12 semiconductor manufacturing projects in six states with investment commitments of more than ₹1.64 lakh crore. Three facilities have already entered commercial production. And the approval of Semicon 2.0 in July 2026, with an investment of ₹1,27,500 crore, is a sign that semiconductor development is no longer just a short term industrial investment but a long term national technology strategy.
From Chip Design to Chip Manufacturing
India is already at the vanguard of the world’s semiconductor design industry. Engineers in India build processors, communication chips, automotive electronics, memory systems, power management ICs and complex system on chip designs.
The challenge has been to turn this design capability into a broader domestic manufacturing ecosystem. Semiconductor manufacturing is totally different from electronics assembly.
Modern fabrication plants have cleanrooms, ultrapure water, specialty gases and chemicals, highly controlled processes, state of the art lithography and inspection tools and a very reliable supply chain. Once a chip is produced, assembly, packaging, testing and reliability qualification are key to getting into a commercial product. India’s new approach is therefore not just to build a wafer fab. It aims to build the complete semiconductor value chain.
The original Semicon India Programme (Semicon 1.0) was launched with a capital of ₹76,000 crore. The Semicon 2.0 expands this vision considerably. Its six pillars include chip design, semiconductor equipment and materials, fabrication, advanced packaging, research and development, and talent development.
Gujarat is emerging as a Semiconductor Hub
Gujarat is now one of the most visible centres of India’s semiconductor manufacturing growth. The Tata Electronics semiconductor fabrication project at Dholera is a particularly important development. The project is being carried out in partnership with Taiwan’s PSMC at an investment of around ₹91,526 crore and is expected to produce about 50,000 wafer starts per month.
Unlike an assembly plant, a semiconductor fab is responsible for the tricky manufacturing processes that produce integrated circuits on wafers. So developing such capabilities in India is vital not only for domestic manufacture but also to develop process engineering, equipment maintenance, materials, quality systems and a supporting supplier ecosystem.
Another important step was made in February 2026, when Micron opened its semiconductor assembly and test facility in Sanand, Gujarat. The facility converts DRAM and NAND wafers manufactured in Micron’s global network into finished memory and storage products. Micron expects the Sanand operation to assemble and test tens of millions of chips during 2026 and scale into hundreds of millions in 2027.
India is expanding beyond conventional silicon technologies as well. There are two additional projects with a total investment of approximately ₹3,936 crore in Gujarat approved in May 2026, such as an integrated compound semiconductor fabrication and ATMP facility for GaN based Mini/Micro LED technology and an OSAT facility for discrete semiconductor devices.
A National Semiconductor Network
The semiconductor opportunity is not just in Gujarat.Tata Electronics is developing a large semiconductor assembly and packaging plant in Assam with an investment of around ₹27,120 crore and a potential capacity of 48 million units per day. Other approved projects are also coming up in Uttar Pradesh, Odisha, Punjab and Andhra Pradesh.
Technologies such as silicon carbide (SiC), power semiconductors, advanced packaging, glass substrates and heterogeneous integration are especially important because the country does not necessarily need to compete only at the smallest leading edge logic nodes.
There are a lot of opportunities in mature and specialty semiconductor technologies that are demanded by automobiles, renewable energy, industrial electronics, smart meters, telecommunications, defence, battery powered IoT devices and power electronics.
For India, success could be achieved in markets where domestic demand, engineering capabilities and manufacturing economics converge.
Why Semiconductor Manufacturing Matters.
Semiconductor manufacturing is much more than replacing imported chips
The global semiconductor shortages showed how disruption at a relatively small number of manufacturing locations can affect automobiles, consumer electronics, telecom infrastructure, and industrial production worldwide.
Second, domestic semiconductor capability can add value to India’s electronics industry. India’s electronics production has already grown substantially from around ₹1.9 lakh crore in 2014-15 to around ₹12 lakh crore in 2024-25. Building more of the semiconductor and component supply chain domestically will also increase the value retained in the country.
Third, semiconductor manufacturing creates a network of supporting industries. A fab or packaging facility requires equipment services, specialty chemicals, gases, substrates, precision components, automation, cleanroom infrastructure, testing laboratories, logistics, and highly trained engineers and technicians.
That means the economic impact extends well beyond the factory.
Manufacturing Is Only the Beginning
Building factories is an important step but sustainable semiconductor leadership cannot be measured simply by the number of plants inaugurated or the capital invested.
Real performance indicators will be yield, utilization, reliability, customer qualification, cost competitiveness, domestic value addition and intellectual property creation.
Semiconductor manufacturing has a continuous learning curve. Small variations in process parameters can have a significant impact on wafer yield and product reliability. This is why companies need to become well versed in process control, defect reduction, statistical analysis, equipment maintenance and failure analysis.
India also needs to build up the local knowledge on semiconductor materials and equipment. Dependence on imported gases, chemicals, wafers, substrates and manufacturing equipment can limit the strategic value of domestic fabs.
Semicon 2.0 acknowledges this challenge and provides explicit support to equipment, materials, Indian intellectual property and resilient semiconductor supply chains.
Talent will decide the next decade in India
Perhaps India’s biggest advantage is the engineering workforce.
But semiconductor manufacturing needs skills which go beyond conventional IT services. The country will need more engineers and technicians trained in VLSI design, semiconductor devices, fabrication processes, cleanroom operations, packaging, RF and analog design, reliability, failure analysis, equipment engineering and manufacturing automation.
Universities and industry need to be deeply connected
Students should have access to not only theoretical courses in semiconductors but also to EDA tools, process design kits, fabrication opportunities, multi project wafer programmes, packaging laboratories and real industrial design challenges.
The progress is already evident. By June 2026, government programmes were supporting 24 semiconductor design projects, 105 companies had access to advanced EDA tools and 23 chip tape-outs have been carried out at different foundries.
The next step will be turning this talent pipeline into commercially successful Indian semiconductor products and intellectual property.
India’s opportunity towards 2035
India should not measure its semiconductor journey only by whether it can replicate the world’s best fabs.
A better strategy is to build capabilities in areas where India can be competitive: automotive semiconductors, power electronics, SiC and GaN devices, analog and mixed signal ICs, smart meters, industrial electronics, IoT devices, telecommunications, sensors, advanced packaging and strategic electronics.
The Government has stated its goal for India’s domestic semiconductor market to reach $200 billion by 2035.
To achieve that, policy stability is key, good universities, international partnerships, patient capital and, most importantly, indigenous technology development is necessary.
The objective should move from “Made in India” to “Designed, Engineered and Made in India.”
India’s semiconductor journey is finally on its way. India has moved away from just issuing statements and policy frameworks to making it in service of real manufacturing.
Commercial production has started at some of the facilities, all of the fabrication and packaging projects are being implemented, and Semicon 2.0 is a much broader way of designing, manufacturing, materials and equipment, research and training talent.
The next decade will decide if India becomes a small node in the global semiconductor supply chain and if it is a real center of semiconductor technology and innovation.
The opportunities are huge but semiconductor leadership is not something you can build in a day. It takes years of manufacturing training, research investment, academic industry cooperation and the creation of globally competitive Indian intellectual property.
If India puts its strong design base into practice, along with manufacturing capacity, packaging, compound semiconductor engineering and indigenous innovation in a proper way, then the semiconductor industry could become one of the pillars of India’s technology economy by 2035. The silicon revolution has begun. Now the next challenge is to make India not only a major market for chips but also a country that designs, manufactures and innovates them for the world.
