India is at the cusp of a semiconductor revolution. In recent years, as digital transformation accelerates worldwide, the demand for semiconductors the “brains” behind modern electronics—has surged. From smartphones to electric vehicles and advanced AI systems, semiconductors are the essential backbone of the technology ecosystem. With its young, tech-savvy workforce and growing market for electronic devices, India is gearing up to establish itself as a global semiconductor hub.

This blog explores India’s semiconductor industry’s current landscape, the government’s role in promoting semiconductor manufacturing, the opportunities and challenges in building a strong semiconductor ecosystem, and the promising future that lies ahead.

What is Semiconductor?

A semiconductor is a material with electrical conductivity between that of a conductor (like metals) and an insulator (like glass). Its unique properties make it fundamental in the creation of electronic devices, such as transistors, diodes, solar cells, and integrated circuits.

Why Semiconductors Matter to India

Semiconductors are integral to today’s digital economy, powering devices, driving AI applications, and enabling connectivity through 5G and IoT. Globally, the semiconductor industry is valued at around $600 billion and is expected to grow as demand for electronics rises. However, the semiconductor supply chain is complex and highly concentrated in certain regions, primarily the US, Taiwan, South Korea, and Japan. This geographical concentration has led to vulnerabilities in the supply chain, and the COVID-19 pandemic highlighted the need for countries to have self-sufficiency in semiconductor manufacturing.

For India, the semiconductor industry represents not only an opportunity to reduce import dependence but also a chance to become a global leader in chip manufacturing, R&D, and design. India’s current electronics manufacturing sector is valued at around $120 billion and is growing at a rapid pace. A homegrown semiconductor industry would provide a significant boost, create jobs, and drive innovation across sectors.

What is Market Growth of Semiconductor in India?

The India Semiconductor Market was valued at US$41,200 million in 2024 and is projected to reach US$115,600 million by 2030, at a CAGR of 18.8% during the forecast period.

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India’s Semiconductor Landscape: Current Status

Historically, India has had a strong presence in the semiconductor design and software sector, but it has lacked manufacturing capabilities. Many of the world’s major semiconductor design companies have R&D centers in India, including Intel, AMD, and Texas Instruments. However, despite its strong foothold in design, India has been largely absent from the semiconductor manufacturing space.

A few key factors contributed to this gap:

1. High Capital Costs: Semiconductor fabs (fabrication plants) are extremely capital-intensive, with initial investments often exceeding $10 billion.
2. Complex Technology and Infrastructure Requirements: Semiconductor manufacturing requires advanced technology and specialized infrastructure, including a stable supply of water, electricity, and high-purity chemicals.
3. Skilled Workforce Needs: While India has a large pool of engineers, chip manufacturing requires a specialized skill set that India needs to further develop.

Despite these challenges, the Indian government and private sector players are taking significant steps to lay the groundwork for a robust semiconductor ecosystem.

Investment Surge: India’s semiconductor industry is receiving substantial investments aimed at transforming it into a global manufacturing hub. For instance, Micron Technology is establishing an ATMP (assembly, testing, marking, and packaging) plant in Gujarat, with a $2.75 billion investment. This major step highlights India’s goal of advancing beyond semiconductor consumption to active manufacturing​​

Government Incentives: The India Semiconductor Mission (ISM) and modified production-linked incentives (PLI) reflect government commitment to nurturing local production. The PLI scheme has been adapted to attract more manufacturers by offering financial support for semiconductor fabrication, while the Design-Linked Incentive (DLI) scheme aims to create around 250,000 skilled jobs by 2030, although challenges in workforce expertise, especially in chip design, are still prevalent​​

International Partnerships: Global giants like AMD, Intel, and Foxconn are expanding into India, signaling confidence in India’s market potential. Local partnerships, like Tata Electronics collaborating with international semiconductor firms, are building expertise within the country, enhancing India’s self-sufficiency and technological capabilities in semiconductors​

Focus on AI and Advanced Computing: Beyond traditional semiconductor manufacturing, the Indian government is fostering research and partnerships to develop AI chips and computing solutions. This approach supports emerging sectors, particularly AI-driven applications, which are essential for India’s growing technology and startup ecosystem​

Government Initiatives to Boost the Semiconductor Industry

Recognizing the strategic importance of semiconductors, the Indian government has launched several initiatives aimed at building a domestic semiconductor manufacturing ecosystem. Key policies include:

1. The India Semiconductor Mission (ISM): Launched as part of the government’s Atmanirbhar Bharat (Self-Reliant India) campaign, the ISM aims to establish India as a global semiconductor hub by focusing on domestic chip design, fabrication, and R&D capabilities. With an investment of around $10 billion, ISM is providing financial and technical support to semiconductor firms willing to set up operations in India.
2. PLI Scheme for Electronics and Semiconductors: The Production-Linked Incentive (PLI) scheme offers financial incentives for manufacturing in India. The government has extended this scheme to semiconductors, providing subsidies and tax benefits to companies establishing chip fabrication units in the country.
3. Research and Development Support: The Indian government is investing in semiconductor research through partnerships with leading academic institutions, including the Indian Institutes of Technology (IITs). This aims to develop a strong pipeline of skilled talent in semiconductor technology.
4. Partnerships with Global Companies: India is forming strategic alliances with countries like Japan, Taiwan, and the United States to leverage expertise and technology in semiconductor manufacturing. Partnerships with companies like TSMC and Samsung are also being explored to bring advanced chip-making technology to India.

Opportunities for India in the Semiconductor Sector

India’s semiconductor journey is fueled by several promising opportunities:

1. Rising Domestic Demand: India has one of the world’s largest consumer electronics markets, and demand for semiconductors is growing rapidly across sectors like automotive, telecommunications, healthcare, and industrial automation.
2. Talent Pool: India’s engineering talent is one of its greatest assets. The country produces a large number of graduates in electronics, electrical engineering, and computer science, many of whom already work in semiconductor design for global companies. With proper training, this workforce can be scaled to support manufacturing.
3. Strategic Geographic Location: Located close to Southeast Asia, India has the advantage of geographic proximity to global tech hubs. With investments in infrastructure and logistics, India could become a major player in the Asia-Pacific semiconductor supply chain.
4. Potential for R&D Hubs: India’s expertise in IT and software positions it well to focus on R&D and innovation in semiconductor design. Companies looking to expand research into next-generation chips for AI, IoT, and 5G can benefit from India’s IT infrastructure and innovative ecosystem.
5. Emerging Ecosystem for Electronics Manufacturing: India’s recent growth in electronics manufacturing, driven by companies like Foxconn, Samsung, and Apple, has created a favorable environment for semiconductor production.

Challenges in India’s Semiconductor Journey

Building a semiconductor industry from scratch is challenging. India faces several hurdles:

1. High Initial Investments: The high cost of setting up fabs and the long time to profitability are significant barriers. Semiconductor fabs require billions of dollars in investment and several years to reach operational efficiency.
2. Infrastructure and Supply Chain Requirements: Semiconductor manufacturing demands high-quality infrastructure, including cleanrooms, reliable power, water, and access to materials. India needs to invest significantly to build this infrastructure.
3. Skilled Workforce: While India has engineering talent, there’s a need to develop a specialized semiconductor manufacturing workforce. Collaborations with global semiconductor giants for training and skill development can help bridge this gap.
4. Dependence on Imports for Raw Materials and Equipment: Currently, India imports most of the materials and equipment used in semiconductor manufacturing. This dependence could be a bottleneck until domestic production capacity increases.
5. Global Competition: Countries like China, South Korea, and Taiwan have a well-established semiconductor industry and enjoy strong government support. India will need to compete with these established players to attract investments and build a sustainable ecosystem.

The Road Ahead: What the Future Holds

The next few years will be crucial for India’s semiconductor ambitions. With supportive government policies, global partnerships, and increasing investments, India is well-positioned to emerge as a semiconductor manufacturing hub. The foundation laid today could pave the way for India to become a significant player in the global semiconductor market within the next decade.

As India progresses, here are some expected milestones:

1. Establishment of Semiconductor Fabs: Within the next 5–10 years, India is expected to establish its first semiconductor fabs, reducing dependency on imports and creating a secure domestic supply.
2. Increased Design and R&D Centers: India’s existing strength in semiconductor design will continue to grow, with more companies establishing R&D hubs to develop next-generation semiconductor technologies.
3. Integration with the Global Supply Chain: As India’s semiconductor ecosystem matures, the country will integrate more deeply into the global semiconductor supply chain, making it an important player in Asia and globally.
4. Boost to Electronics Manufacturing and Exports: A domestic semiconductor industry will strengthen India’s electronics manufacturing sector, making it more competitive and boosting exports of “Made in India” electronic goods.

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