India’s Strategic Move Towards Becoming a Semiconductor Hub

On February 29, the Indian government gave the green light to three new semiconductor manufacturing facilities as part of their ambitious plan to establish a domestic industry for producing these crucial components. The construction of these facilities is set to commence within the next 100 days, marking a significant step towards boosting India's semiconductor manufacturing capabilities.


In December 2021, the Indian government launched the India Semiconductor Mission, a program aimed at developing a domestic ecosystem for semiconductor and display manufacturing. With a budget of Rs. 76,000 crore, this initiative aims to position India as a major player in the field. In June 2023, the government approved a proposal from Micron to build a semiconductor facility in Sanand, Gujarat, which is currently under construction. It is expected to drive the growth of a robust semiconductor ecosystem in the area.

Tata Electronics Private Limited (TEPL) has partnered with Powerchip Semiconductor Manufacturing Corp (PSMC) from Taiwan to establish a semiconductor fabrication facility (fab) in Dholera, Gujarat, India. This fab will have a production capacity of 50,000 wafers per month (WSPM) and will focus on creating chips for high-performance computing, electric vehicles, and consumer electronics. The estimated investment for this project is Rs. 91,000 crore. PSMC brings its chip manufacturing expertise to the table, while TEPL leverages its presence in the Indian market.

This plant will be the first in India to manufacture semiconductor wafers, which are widely used in various industries. The construction is expected to commence in approximately three months. This is a significant milestone for India, which has struggled to attract global semiconductor companies in the past. Moreover, it is crucial considering the concentration of chip manufacturing in a few countries, such as China, Taiwan, and South Korea.

Tata Semiconductor Assembly and Test (TSAT), a private limited company, is planning to build a new semiconductor facility in Morigaon, Assam, India. This project is estimated to cost ₹27,000 crore. TSAT aims to develop its own advanced packaging technologies, including flip chip and integrated system in package (ISIP). The facility will have a daily production capacity of 48 million units and cater to various sectors, including automotive, electric vehicles, consumer electronics, telecom, and mobile phones. It is expected to generate over 27,000 jobs, both directly and indirectly.

The Morigaon facility will primarily focus on manufacturing three main technologies: Wire Bond, Flip Chip, and Integrated Systems Packaging (ISP). These technologies will produce components for several industries, including automotive, communications, and electronics. With investments in Indian-developed technology and an experienced team, the construction of the facility is set to commence this year, and the first segment is projected to open by mid-2025. This project aligns with the Indian government’s plans for technological self-sufficiency and economic growth.

The India Semiconductor Mission has achieved significant milestones in a short period of time. There has been a surge of interest from major semiconductor companies globally. The Indian government has announced financial incentives totaling $7 billion for several new semiconductor manufacturing facilities, including a collaboration with Micron. Additionally, India is actively attracting foreign companies like Foxconn and AMD to establish local operations. This comprehensive plan, designed with a 20-year timeframe, has the potential to leverage India’s existing pool of 300,000 design engineers who contribute to the global chip design landscape.

CG Power is collaborating with Renesas Electronics from Japan and Stars Microelectronics from Thailand to build a new semiconductor facility in Sanand, Gujarat, India. This project involves an investment of Rs.7,600 crore. Renesas, a major player in specialized chips, will provide technological expertise. The facility will manufacture chips for various sectors, including consumer electronics, industrial applications, automobiles, and power, with an expected production capacity of 15 million units per day.

Samsung Semiconductor India Research (SSIR) has recently opened a state-of-the-art R&D facility in Bengaluru, focusing on cutting-edge research. This complements the government’s Design-Linked Incentive (DLI) Scheme, which supports domestic companies. Under this scheme, Saankhya Labs and SensesemiTechnologies have received approval to develop advanced solutions for various applications, such as 5G, satellite communication, and medical devices. Additionally, a joint venture between Murugappa Group, Renesas Electronics, and Stars Microelectronics is in the pipeline to establish a semiconductor assembly and testing facility in Gujarat, pending government approvals and subsidies.

In a significant development, Israeli chipmaker Tower Semiconductor is in the final stages of securing approval for an $8 billion fabrication plant in India. This would mark the first instance of a top global company participating in India’s $10 billion chip manufacturing initiative. The government aims to approve the proposal before the upcoming general elections. These recent developments highlight India’s growing presence in the global semiconductor landscape.

The Minister of State for Electronics & Technology emphasized this positive development, highlighting India’s rapid emergence as a player in the global semiconductor industry. Just two years ago, India had no presence in this crucial sector. A total investment of Rs. 2.50 Trillion is planned through these companies.

As India embarks on this ambitious journey, it has the potential to become a global center for both innovation and manufacturing in the semiconductor sector. Additionally, this initiative paves the way for indigenous development of advanced packaging technologies within India. The establishment of these units will create 20,000 direct jobs in advanced technology, alongside an estimated 60,000 indirect jobs across various industries. This will significantly boost employment in downstream sectors that rely on semiconductors, such as automotive, electronics, telecommunications, industrial manufacturing, and many others.

The government recognizes the rapid pace of change in the semiconductor industry and is focusing on capturing market share in the 28 nanometer and above chip segment, which continues to be in high demand across various applications. India’s large talent pool and growing international collaborations position the country well in this market. While the US has a larger budget for its semiconductor program, India is making significant progress with its $10 billion initiative. In essence, India’s Semiconductor Mission represents a transformative leap in the nation’s technological sphere, brimming with potential and abundant opportunities.

With the approval of three new manufacturing facilities and strategic collaborations with global giants, India is swiftly emerging as a formidable player in semiconductor production. Initiatives like Tata Electronics’ partnership with Powerchip, CG Power’s collaboration with Renesas and Stars Microelectronics, and the potential $8 billion investment from Tower Semiconductor underscore India’s commitment.

The government’s holistic approach, focusing on talent development, comprehensive chip design, and international collaborations, positions India for global semiconductor prominence. As the nation strides towards self-sufficiency, it promises innovation, economic growth, and a pivotal role in the dynamic semiconductor industry.

Tarah Nguyen