Will India Become a Semiconductor Hub?

When you hear the phrase "chip shortage," you probably picture factories in Taiwan or South Korea. But a growing chorus of analysts, investors, and policymakers keep asking: India semiconductor manufacturing could be the next big story. This article breaks down where India stands today, what policies are in play, and whether the country can realistically build a home‑grown chip ecosystem.

Global Chip Landscape in a Nutshell

The world’s semiconductor output is dominated by a handful of regions. As of 2024, Taiwan’s TSMC and South Korea’s Samsung together produced over 60 % of the world’s most advanced nodes (7 nm and below). The United States focuses on design and higher‑margin fabless operations, while China has poured billions into 28‑nm and larger processes. Europe clings to specialty analog and automotive chips. The supply chain is a delicate web of design tools, raw silicon, photolithography equipment, and a skilled workforce.

Where India Fits Right Now

India semiconductor industry covers a small but fast‑growing mix of design services, electronics manufacturing, and a handful of pilot fabs still accounts for less than 1 % of global chip output. Most of the value chain lives in design and assembly‑testing (known as “AS‑IT”). Companies like Qualcomm and Intel run design centers in Bangalore and Hyderabad, but the actual wafer‑fabrication step is largely outsourced to fabs abroad.

Key stats (2024):

• Design revenue: $12 billion, growing at ~15 % YoY.
• Assembly‑test capacity: ~1.2 million wafers per year.
• Only two small‑scale fabs (e.g., 0.35 µm CMOS) operate in the country.

Policy Push: Make in India Meets PLI

The government’s Make in India initiative launched in 2014 to boost domestic manufacturing across sectors found a new focus in 2022 with the Production‑Linked Incentive (PLI) scheme for electronics and semiconductors. The PLI offers up to 30 % cash incentives for capital expenditure, provided firms meet employment and localisation targets.

Key components of the PLI for semiconductors:

1. Eligibility for projects that spend at least $500 million in India.
2. Incentive caps: $1 billion for fabs, $250 million for fabless design houses.
3. Additional bonuses for training Indian engineers and sourcing materials locally.

By the end of 2025 the Ministry of Electronics & Information Technology (MeitY) reports over $8 billion committed under the scheme, with a pipeline of ten major projects.

Major Fab Projects on the Horizon

Several multinational and domestic consortia have announced plans to build fabs on Indian soil. The table below compares the most advanced proposals.

Even the most ambitious of these projects target 28 nm or larger, which is suitable for automotive, IoT, and power electronics but falls short of the cutting‑edge nodes used in smartphones. Still, the sheer capital involved signals a serious shift.

Talent Pipeline and Design Ecosystem

Building fabs is only half the battle. A robust chip design ecosystem includes EDA tools, design services, and a steady flow of engineers is essential for sustainable growth. India already boasts over 1,000 engineers graduating annually in VLSI and microelectronics, thanks to programs at IITs, NITs, and private universities.

Launches in the past three years:

• ANALOG Devices Lab - a joint venture between Cadence and IISc Bangalore offering hands‑on EDA training.
• India Design Forum - an annual conference that now draws 2,500 participants from fabless firms, universities, and government bodies.
• National Semiconductor Research Center - funded under the Ministry of Science & Technology, focusing on analog, RF, and power‑device research.

These initiatives aim to reduce reliance on overseas design houses and keep talent home.

Challenges That Can’t Be Ignored

Despite the momentum, several hurdles remain:

• Capital intensity: Advanced nodes require photolithography equipment costing $150 million per unit, often supplied only by ASML. Securing such equipment amid geopolitical tensions is a major risk.
• Supply‑chain gaps: High‑purity silicon, specialty gases, and advanced metrology tools are still mostly imported. Any disruption can stall production.
• Policy certainty: Incentive schemes have been refreshed multiple times in the last decade. Investors crave long‑term stability beyond election cycles.
• Skill depth: While fresh graduates are plentiful, seasoned process engineers with experience at 7‑nm lines are scarce.
• Environmental compliance: Fab construction demands massive water and power. Meeting sustainability standards adds cost and complexity.

Addressing each of these points will determine whether India can move from “pilot” to “mass‑production” status.

Timeline: When Could India Ship Its Own Chips?

Based on current project schedules and the typical 3‑5‑year ramp‑up for a new fab, a realistic roadmap looks like this:

1. 2025‑2026: Groundbreaking of the Gujarat and Karnataka fabs; recruitment of senior process engineers.
2. 2027‑2028: First silicon wafers processed at 28 nm and 45 nm lines; initial volume shipments to automotive OEMs.
3. 2029‑2030: Capacity expansion to 2‑3 million wafers per year; potential start of a 14 nm R&D line under a joint venture with a global foundry.
4. 2031‑2035: If policy, talent, and supply chain align, India could launch a dedicated advanced‑node pilot (e.g., 10 nm) targeting high‑value markets like AI accelerators.

In short, India is likely to become a regional hub for midsize nodes by the early 2030s, with a long‑term possibility of moving up the node ladder if the ecosystem matures.

What This Means for Stakeholders

For investors, the early‑stage fabs represent high‑risk, high‑reward opportunities; diversification across multiple projects can mitigate exposure. For domestic manufacturers, the drive toward local silicon promises lower import tariffs and shorter lead times, especially for automotive and defense contracts. For policy makers, the next priority is to secure a stable supply of critical equipment and to align education pipelines with industry needs.

Frequently Asked Questions

All told, the answer to the headline question isn’t a simple yes or no. India is on a clear trajectory toward semiconductor production, but the journey will be phased, heavily policy‑driven, and initially focused on midsize nodes. Keep an eye on the PLI allocations, the first wafer shipments from Gujarat and Karnataka, and the talent pipelines emerging from India’s top engineering institutes. Those signals together will tell you whether India will truly become the next semiconductor hub.