By: Nimish Rajput | Electronics Era
From Semiconductor Design Leadership to a Full-Scale Manufacturing Ecosystem
Nowadays, semiconductors have become more than just electronic devices’ elements; they are strategic assets that drive economic development, technological competition and national security. Smart phones, electric cars, AI servers, 5G technology, industrial automation, healthcare equipment, aerospace and defense applications use semiconductors.
For many years, India built a powerful niche for itself in the area of semiconductor design, embedded software, verification, research and development, and engineering services. However, wafer fab, assembly, packaging and testing was always done abroad.
It is time for India to take its semiconductor path to a new level, developing domestic manufacturing capabilities and integrating semiconductor design, semiconductor manufacturing, packaging, testing, semiconductor materials and equipment, and electronics manufacturing into one ecosystem.
The goal is not only to manufacture semiconductor chips in India. The goal is to create a competitive semiconductor value chain to serve the growing demand for electronics in India and become an important link in the global supply chain.
India’s Semiconductor Opportunity
The world semiconductor industry is experiencing a fundamental shift.
Supply chain problems, geopolitical issues, AI proliferation, electric mobility, and increased semiconductor content in electronic systems are all factors that have pushed countries towards building their own semiconductor industries.
There are a number of strengths that India can exploit.
First, India has a sizeable electronics market that is only going to grow in the coming years.
Second, India has an abundant engineering talent pool as well as decades of semiconductor design experience.
Third, there is rapid growth in electronics manufacturing which means a home-grown customer base.
Fourth, government programs are offering financing and institutions for semiconductor fabrication, packaging, design, and research.
It is expected that the Indian semiconductor market is going to increase significantly in the coming years on account of smartphones, automotive electronics, telecom systems, industrial systems, data centers, AI, consumer electronics, and strategic electronics.
Market demand + engineering talent + manufacturing + government programs give India its semiconductor ecosystem.
Major Progress: India’s Semiconductor Manufacturing Base Takes Shape
The best proof of India’s progress is the creation of manufacturing units.
According to the government of India by July 2026, the number of approvals for the manufacturing unit of semiconductors stood at 12, amounting to investments of more than ₹1.64 lakh crore. The units include silicon fabrication, silicon carbide manufacturing, gallium nitride-related technology, and several packaging units. Three firms, namely Micron, Kaynes, and CG semi, have initiated production, while a fourth project will start operations in 2026.
This shows the transition from policies to industrialization.
Micron: Establishing India’s OSAT Foundation
The semiconductor assembly and test manufacturing facility of Micron in Sanand, Gujarat is one of the most critical initial facilities.
This facility will make an investment worth approximately ₹22,516 crore and it will be for assembly and testing of DRAM and NAND products, with a planned capacity of about 14 million per week.
India will be able to create a robust position in the value chain of semiconductors even before making itself an active manufacturer of advanced logic devices through this facility.
Assembling and testing are becoming increasingly complex processes.
Tata Electronics and India’s First Major Silicon Fab
Among the most strategic projects is the Tata Electronics’ fabrication plant for semiconductors in Gujarat, which is being carried out through technological collaboration between Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC).
The project is expected to be a ₹91,526 crore investment with a capacity of about 50,000 wafers per month (WSPM).
Fab plant is a very significant technology jump since fabrication of silicon devices involves hundreds of precise processes.
This includes:
Wafer preparation > oxidation/deposition > photolithography > etching > ion implantation > metallisation > inspection > wafer testing > dicing > packaging > final testing
At each point there needs to be extreme control maintained over contamination, temperature, pressure, chemical concentration, particle count and process uniformity.
In the case of India, a silicon fab plant will provide capabilities not just within the plant but even outside it as well.
Market Growth: A $100–110 Billion Opportunity
The biggest driving force for India’s semiconductor policy is its domestic demand.
India’s semiconductor market has seen fast growth in relation to mobile phones, electronic assembly, automotive electronics, automation, telecommunication and IT services.
India’s Semiconductor Market Growth
| Year | Estimated Market Size |
| 2023 | $38 billion |
| 2024–25 | $45–50 billion |
| 2026 | $63 billion |
| 2030 | $100–110 billion |
These figures are estimates provided by industries in government and industry literature rather than one series of audited market numbers. The Government of India has quoted approximately $63 billion for 2026 and $100-$110 billion for 2030.
From these figures it can be inferred that the semiconductor opportunity for India may well double itself from 2024-25 to 2030.
Another independent market analysis has pegged the size of the market to grow to approximately $45 billion in 2025 and reach $100 billion by 2030 at a CAGR of about 13.05%.
The key here is that multiple industries rather than one electronics segment are driving growth in demand.
From Chip Design to Chip Manufacturing
The semiconductor industry of India has traditionally revolved around the design of the chips only.
Several global semiconductor firms have set up huge Research and Development centers in India, especially in Bengaluru, Hyderabad, Chennai, Noida, etc. The Indian engineers participate in developing the designs of processors, physical design, embedded design, networking, automotive electronics, and semiconductors software.
Manufacturing of semiconductors needs entirely different infrastructure.
A complete semiconductor value chain involves:
Semiconductor IP > EDA > IC Design > Wafer Fabrication > Assembly > Packaging > Testing > Systems Integration > Electronics Manufacturing
For wafer fabrication, clean rooms, ultra-pure water, power supply that is highly reliable, specialty gases, process chemicals, lithography, deposition, etch tools and advanced process control technologies are necessary.
The packaging and test processes need equally specialized tools.
As such, the Indian semiconductor plan should be seen as building an ecosystem and notmerely constructing a fab.
Government Support and the Semiconductor Mission
The Government of India considers semiconductor manufacturing as one of its priorities through the India Semiconductor Mission and the Semicon India Program.
The first Semicon India program was started at the cost of Rs. 76,000 crore for the development of semiconductor and display manufacturing.
The program offers support to semiconductor fabs, compound semiconductor manufacturing, ATMP/OSAT operations, and semiconductor design.
The scope of the policy is being widened to include the entire supply chain.
One of the important goals of the policy includes attracting international semiconductor manufacturers and technology partners along with promoting domestic Indian companies to gain indigenous capabilities in semiconductor design, packaging, material and manufacturing equipment.
This is essential because semiconductor manufacturing is associated with high capital expenditure and lengthy technology development cycles.
Government intervention can lower down the initial risks of investment and create an environment, which is required for investments by the private sector.
The ultimate goal is to position India as a semiconductor-manufacturing destination.
Building India’s Fab Ecosystem
A semiconductor wafer fabrication facility or simply a ‘fab’ is critical for the manufacturing of semiconductors.
A fab involves hundreds of processes performed on silicon wafers in tightly controlled conditions. Some of these processes are oxidation, deposition, photolithography, etching, ion implantation, cleaning, metallization, inspection and electrical test.
The fab must control microscopic particles, temperature, humidity, vibration and contamination by chemicals.
Therefore, India’s intention to set up its commercial wafer fabrication facilities represents an important milestone in its industry.
Tata Electronics’ semiconductor wafer fab in Gujarat, which is in the development phase through technology collaboration with Powerchip Semiconductor Manufacturing Corporation (PSMC) is one of the most important initiatives in India’s semiconductor strategy. It is meant to establish semiconductor wafer fabrication capability on a large scale.
It does not end there.
A semiconductor manufacturing facility could attract manufacturers of gases, chemicals, silicon wafers, precision parts, process equipment, filtration equipment, cleanroom equipment and industrial automation systems.
As such, it can form the nucleus of a semiconductor manufacturing cluster.
Advanced Packaging: India’s Strategic Entry Point
Even though the manufacture of wafers gets much focus, semiconductor packaging might offer India another critical advantage.
In traditional semiconductor packaging, the function was only to protect the silicon die and establish connections. In modern-day semiconductor packaging, however, the function has grown into an essential aspect of semiconductor design.
The development of artificial intelligence and high-performance computing has created a need for:
- 2.5D packaging
- 3D integration
- Chiplets
- Fan-out packaging
- Wafer-level packaging
- System-in-Package
- Heterogeneous integration
- High-density interconnects
- Hybrid bonding
For sophisticated AI chips, the package design is going to affect the memory bandwidth, thermals, power distribution and signal integrity.
It implies that the semiconductor packaging industry is getting nearer to becoming the focus of innovative efforts at the systems level for semiconductors.
India is acquiring skills in assembly, test and packaging through multiple projects. The facilities tied up with Micron, Tata Electronics, CG Power and other corporations are enabling the creation of a new OSAT and ATMP eco-system.
It gives India a potential route into high-value-added semiconductor production without being an early leader in logic technology.
Compound Semiconductors: Another Growth Opportunity
The Indian semiconductor policy is also growing beyond traditional silicon.
Compound semiconductor technology including silicon carbide (SiC) and gallium nitride (GaN) are gaining importance in the domain of power electronics and high frequency applications.
SiC-based semiconductors provide advantages of high breakdown voltage, temperature tolerance, and low switching losses and find use in:
- Electric vehicles
- EV chargers
- Solar inverters
- Industrial drives
- Renewable-energy systems
- Data-centre power supplies
GaN, on the other hand, exhibits good switching performance and high power density properties. It is used in applications such as compact chargers, telecommunication devices, RF technology, and power converters.
These areas provide scope for India to specialize in semiconductors in fast-growing segments of the market rather than competing in all segments of semiconductors at once.
The Semiconductor Equipment and Materials Opportunity
The least apparent yet strategically significant part of chip production is the ecosystem of equipment and materials used.
A contemporary semiconductor manufacturing facility needs advanced equipment to:
- Lithography
- Deposition
- Etching
- Ion implantation
- Wafer cleaning
- Metrology
- Inspection
- Packaging
- Testing
It also demands the use of ultra-high purity gases, chemicals, photoresists, silicon wafers, substrates, and packaging materials.
Developing local expertise in these fields will greatly enhance India’s semiconductor supply chain resilience.
This opens up prospects for Indian businesses in engineering, automation, chemicals, instrumentation, filtration, vacuum technology, and advanced materials.
Eventually, semiconductor manufacturing may lead to the creation of an entire high-technology industrial ecosystem.
Indigenous Chip Design and Semiconductor IP
Just because of manufacturing ability, India is not going to be a semiconductor power.
India needs to shift from being a supplier of semiconductor engineering services to being a developer of semiconductor products/technology.
IP development in the field of semiconductors can take place in:
- AI and edge computing
- Automotive systems
- Industrial controllers
- IoT devices
- 5G and future 6G systems
- Security applications
- Power management
- Sensors
- Strategic electronics
The emergence of domestic chip startups is an encouraging development.
The long-term progression should be:
Engineering Services → Semiconductor IP → Application-Specific ICs → Processor Platforms → Complete Semiconductor Products
This transition can create significantly higher economic value and strengthen India’s position in global technology markets.
Automotive and EVs: A Major Semiconductor Demand Driver
The auto industry is undergoing a fast transition towards becoming an electronics-based industry.
An electric vehicle has semiconductor components in the battery management system, inverter, motor control, onboard charger, DC-DC converter, and control systems of the vehicle.
With increasing electrification and automation of vehicles, the number of semiconductors used per vehicle will keep growing.
Therefore, the growing Indian automotive manufacturing industry represents a large domestic market for semiconductor companies.
Creation of domestic capability in microcontrollers, power semiconductors, sensors, connectivity chips, and battery management ICs can be an important strategic goal.
AI and Data Centres: The Next Semiconductor Catalyst
AI is driving a new wave of semiconductor demand.
Advanced AI systems need compute silicon, GPUs and accelerators, high-bandwidth memory, networking silicon, power management devices and advanced packaging.
Semiconductor needs of AI systems are also very inter-related.
For an advanced AI accelerator to function, there will be a need for:
High Bandwidth Memory + Advanced Packaging + High Speed Networking + Power Management + Thermal Management
This makes the expanding data centre industry and AI industry in India a potential source of opportunities for semiconductor suppliers.
AI can also act as a catalyst in the development of semiconductors in India.
Electronics Manufacturing: Creating a Virtuous Cycle
There can be no separation of the semiconductor industry from that of electronics manufacturing.
The Indian electronics manufacturing sector has witnessed considerable growth in recent years owing to mobile phone manufacturing, consumer electronics, telecommunications equipment, automotive electronics, and industrial electronics.
This presents an excellent opportunity.
An increase in electronics manufacturing results in increased demands for semiconductors. Semiconductor manufacturing at home can help in overcoming any supply chain dependency and provide better access to semiconductors. A better component ecosystem can enhance domestic electronics manufacturing’s competitiveness.
The cycle thus formed is:
Electronics Manufacturing → Semiconductor Demand → Semiconductor Manufacturing at Home → Better Component Ecosystem → Better Manufacturing Competitiveness → Exports
The Electronics Components Manufacturing Scheme adds to this overall ecosystem by manufacturing components domestically.
Talent: The Foundation of Semiconductor Manufacturing
There is more to fabricating than just money and equipment. There are specialized people that are needed.
India has got a wonderful base already with its current pool of engineers, but semiconductor fabrication needs industry experience.
Therefore, universities and semiconductors firms will have to come up with industry programs and training centers.
The semiconductor industry needs both highly qualified engineers as well as specialized technicians who can work with the complex machinery.
Infrastructure and Sustainability
Semiconductor production imposes extreme stress on infrastructure needs.
The fabrication plant needs a constant supply of electricity, pure water, cleanroom facility, specialty gases, chemicals, and sophisticated HVAC system.
Water management will become critical especially as the semiconductor industry in India grows. The use of recycling and water recovery will cut down water usage and become more environmentally sustainable.
Efficiency in energy usage is another major issue. Fabrication plants need continuous supply of electricity for various purposes such as cleanroom, chiller, pumps, and other manufacturing equipment.
Thus, future semiconductor complexes need to be designed as sustainable high-tech industrial ecosystems.
Challenges on the Road Ahead
India’s semiconductor opportunity is enormous, but several challenges must be addressed.
High Capital Requirements
Fabs and advanced packaging facilities require substantial investment and continuous technology upgrades.
Technology Complexity
Successful semiconductor manufacturing requires years of process optimisation and yield improvement.
Supply-Chain Dependence
India will initially remain dependent on international suppliers for several critical equipment, materials and technologies.
Talent Availability
Specialised semiconductor process, equipment and packaging expertise will take time to develop.
Global Competition
India is competing against mature ecosystems in Taiwan, South Korea, Japan, the United States, China and Europe.
Manufacturing Economics
The ultimate success of semiconductor manufacturing will depend on quality, yield, reliability and cost—not simply on investment announcements.
India must therefore maintain a long-term strategy extending beyond individual projects and investment cycles.
The Road to 2030
Over the next five to ten years, things will be crucial for India’s semiconductor plans.
India has the potential to build a distinctive semiconductor eco-system, focusing on its core competencies.
The expected growth in India’s semiconductor market forms the demand basis here. According to government-supported industrial forecasts, India’s semiconductor market may grow to approximately $100–110 billion by 2030 from about $38 billion in 2023.
Such growth offers a big opportunity for Indian semiconductor producers and suppliers.
Conclusion: From Semiconductor Consumer to Global Semiconductor Hub
India’s journey in the world of semiconductors has moved from dreaming to doing. From increased spending on wafer fab, OSAT, advanced packaging, compound semiconductors, indigenously designed chips and the necessary infrastructure, India is slowly building the blocks for a fully-fledged semiconductor eco-system. The potential goes far beyond semiconductor production; it includes semiconductor IP, tools and machinery, materials, testing, packaging, R&D and human capital. With growing electronics, automotive, EVs, telecom, AI, data centre, aerospace and defence industries, India already has a strong foundation of local demand, while global diversification of the semiconductor value chain provides a chance for export-led growth and international collaborations. The challenge will be in creating a sustainable, low-cost and technologically enabled semiconductor value chain. India’s semiconductor success will depend on sustained policy commitment, industry-university collaboration, technology partnerships and investment in R&D. With proper execution, India can leverage its potential as a semiconductor design and consumption giant to become a globally renowned semiconductor-manufacturing giant.
