India’s Ambitious Journey Towards Semiconductor Dominance: A Critical Analysis

 

Introduction

Imagine a world where every electronic gadget—from smartphones to advanced AI systems—relies on tiny yet powerful semiconductor chips. These chips serve as the backbone of modern technology, enabling innovation in almost every industry.

India, recognizing the strategic importance of semiconductors, has set an ambitious goal of becoming a global semiconductor hub. With visionary policies, record investments, and groundbreaking research from institutions like IIT Madras and ISRO, the country is moving towards semiconductor self-sufficiency. However, India still has to overcome several major challenges to become truly self-reliant in semiconductor manufacturing.

This blog critically examines India’s progress, challenges, and realistic future prospects in the global semiconductor industry.

1. Understanding Semiconductors: The Foundation of Modern Technology

A semiconductor is a material that sometimes allows electricity to pass and sometimes blocks it. Unlike metals (always conductive) or insulators (never conductive), semiconductors have unique properties that allow them to control electrical flow. This ability makes them perfect for building electronic devices such as microprocessors, sensors, and AI chips.

The semiconductor industry is dominated by a few global players like TSMC (Taiwan), Samsung (South Korea), and Intel (USA). India’s challenge is to break into this high-tech industry and establish itself as a key player.

 

2. India’s Ambitions: Policy Initiatives and Investments

Government Initiatives: The Drive Towards Self-Reliance

The Indian government has introduced several key policies to boost domestic semiconductor manufacturing:

·       Semicon India Program (₹76,000 crore): Aims to develop a domestic semiconductor and display fabrication ecosystem.

·       Production-Linked Incentive (PLI) Scheme: Provides financial support to attract global semiconductor firms.

·       State-Level Support: Gujarat and Karnataka are leading the way by offering land, subsidies, and infrastructure to semiconductor companies.

Major Investments and Global Collaborations

Several international companies have expressed confidence in India’s semiconductor potential:

Ø  Vedanta-Foxconn Joint Venture: Proposed a ₹1.5 lakh crore fab plant in Gujarat.

Ø  Micron’s Semiconductor Facility (₹22,500 crore): Expected to boost chip packaging and testing in India.

Ø  Lam Research (₹1000 crore investment): Supporting India’s semiconductor equipment manufacturing sector.

Ø  Tata Electronics & ISRO’s Indigenous Chip Breakthrough: A significant step in reducing import dependency.

These developments indicate strong momentum, but challenges remain.

 

3. Critical Challenges Hindering India’s Semiconductor Growth

A. Lack of Fabrication Facilities (Fabs)

Despite heavy investments, India lacks a full-scale semiconductor fabrication facility. A fab plant requires billions of dollars and advanced expertise in lithography, wafer production, and chip etching—fields where India still lags behind global leaders like TSMC and Intel.

B. Talent Shortage in Semiconductor Manufacturing

While India has a strong pool of VLSI (Very Large-Scale Integration) engineers, it lacks expertise in high-end chip manufacturing. Semiconductor fabrication requires highly skilled workers trained in advanced physics, material science, and cleanroom operations—a gap that India must address through focused education and vocational programs.

C. Dependence on Imports for Raw Materials & Equipment

India imports 100% of its high-end semiconductor chips, primarily from Taiwan, China, and the U.S. Even after the Micron facility becomes operational, India will still depend on foreign suppliers for advanced chips below 10nm.

D. Geopolitical Risks & Global Supply Chain Uncertainty

The Taiwan-China conflict poses a major risk to the global semiconductor industry. Since TSMC produces over 50% of the world’s advanced chips, any instability in the region could severely impact India’s supply chain. Additionally, India’s reliance on China for raw materials like silicon wafers and photolithography chemicals is a strategic vulnerability.

 

4. Comparative Analysis: India vs. Global Semiconductor Giants

Country	Strengths	Key Players	Market Share
Taiwan	Advanced fabs, high R&D investment	TSMC	50%+
South Korea	Memory chip dominance	Samsung, SK Hynix	20%
USA	Leading chip design firms	Intel, Nvidia, Qualcomm	12%
China	Heavy state investment, growing fabs	SMIC, Huawei	6%
India	Strong in chip design, emerging in packaging	Vedanta-Foxconn, Tata, ISRO	<1%

India’s Niche Advantage

Instead of competing directly with TSMC or Samsung, India should focus on:

✔ Chip Design & Packaging (where it already has expertise).

✔ IoT, Automotive, and AI Processors instead of high-end microchips.

✔ Building strong partnerships with global semiconductor players.

5. Future Roadmap: What India Needs to Do

To bridge the gap and become a major semiconductor hub, India must:

✔ Accelerate Fab Construction: Focus on building semiconductor manufacturing infrastructure with global expertise.

✔ Develop Specialized Talent: Introduce fabrication-specific education programs in IITs and NITs.

✔ Reduce Import Dependency: Invest in local silicon wafer production and semiconductor-grade chemicals.

✔ Enhance Global Partnerships: Strengthen alliances with Japan, the U.S., and the EU for semiconductor technology transfer.

✔ Prioritize AI & Automotive Chips: Instead of competing in high-end smartphone chips, focus on niche areas like AI, IoT, and automotive semiconductors.

Conclusion: Can India Achieve Semiconductor Self-Reliance?

India’s semiconductor ambitions are bold and promising. The government’s aggressive policy push, foreign investments, and indigenous research provide strong momentum. However, challenges in infrastructure, skilled workforce, and supply chain dependencies need urgent resolution.

While India cannot rival TSMC or Samsung overnight, it can become a global leader in chip design, packaging, and specialized semiconductors. With a strategic, phased approach, India can lay the foundation for a self-sufficient, world-class semiconductor industry in the coming decades.

References

1.     Government of India (2023). Semicon India Program: Policy Guidelines and Investments. Ministry of Electronics & IT.

https://www.meity.gov.in/esdm/Semiconductors-and-Display-Fab-Ecosystem

2.     TSMC Financial Reports (2023). Global Semiconductor Market Share Analysis.

https://investor.tsmc.com/english/financial-reports

3.     Tata Electronics Press Release (2024). India’s Semiconductor Packaging Industry Growth.

https://ism.gov.in/

4.     Micron Technology India (2024). Investment Plans and Strategic Roadmap.

https://pib.gov.in/PressReleasePage.aspx?PRID=2039638

5.     Economic Times (2024). Semiconductor Industry in India: Challenges & Opportunities.

https://www.india-briefing.com/news/semicon-india-program-investment-incentives-manufacturing-design-semiconductors-industry-23860.html/

6.     Lam Research announces ₹1000 crore investment in India.

Economic Times

7.     CG Semi Private Limited secures ₹3501 crore fiscal support for semiconductor project in Gujarat.

Economic Times

8.     Singapore aims to build a semiconductor ecosystem in India.

The Hindu

9.     India’s first private semiconductor manufacturing facility to be established in Andhra Pradesh with an investment of ₹14,000 crore.

Times of India

10.  IIT Madras and ISRO develop India’s first indigenous aerospace-quality semiconductor chip.

Education Times

 

Blog written by Jatin Singh Bisht and Karishma Giri.