The Future Is Now: India’s Journey to Becoming a Global Chip Powerhouse

The digital age is characterized by the exponential growth of artificial intelligence, with an estimated 8.4 billion AI-powered assistants now in operation globally—a figure surpassing the world’s human population. This surge fuels projections of a $1.81 trillion AI market by 2030, simultaneously escalating the demand for robust computing, memory, and networking infrastructure. At the heart of this AI revolution lies the semiconductor industry, poised to reach a $1 trillion market by the same year.

However, the global supply chain disruptions witnessed during the COVID-19 pandemic laid bare the vulnerabilities inherent in relying on concentrated manufacturing hubs. For India, an emerging market and a nation historically dependent on semiconductor imports with less than 9 percent sourced domestically in 2021, the impact was profound. The automotive sector, for instance, experienced a cumulative backorder of nearly 500,000 units, serving as a stark reminder of the critical need for a resilient, domestically driven semiconductor ecosystem.

As India’s digital revolution is being powered by a tiny yet transformative component—the semiconductor chip—the nation is rapidly transforming into a global technology leader. From Unified Payments Interface (UPI) to RuPay cards, DigiLocker, and DigiYatra, digital applications are streamlining once-chaotic operations into one-click solutions. This digital shift, along with rapid growth in mobile phones, electronics, and automobiles, is fueling India’s consumer market. By 2027, India is set to become the world’s third-largest consumer market, driven by a growing middle class and rising incomes.

India’s big bet: A self-reliant semiconductor ecosystem

As a crucial step toward powering its $110 billion semiconductor market target by 2030, representing 10 percent of global consumption, India launched the India Semiconductor Mission (ISM) in December 2021 to develop a self-sustaining chip ecosystem. The initiative focuses on building semiconductors and displaying fabrication capabilities while also promoting fabrication of compound semiconductors, silicon photonics, and sensors, which are critical for power electronics and telecommunications. Additionally, the Indian government is supporting the Design Linked Incentive (DLI), promoting semiconductor design and product development and encouraging innovation and technological advancement.

A modern semiconductor fabrication unit, or fab, is an immense and highly complex facility—spanning the size of 14 to 28 football fields and consuming around 169 megawatt-hours of energy annually, enough to power an entire Indian city. Inside, the clean rooms—where chips are manufactured—must maintain ultra-specialized conditions to ensure precision at the nanometer scale. The fabrication process itself is highly intricate, involving multiple steps such as wafer preparation, photolithography (pattern transfer), deposition, etching, doping, interconnection, testing, and packaging.

Given the massive infrastructure and investment required, India has launched transformational semiconductor projects to become a key player in chip manufacturing:

• Tata Electronics and Taiwan’s PSMC — $10.9 billion fabrication plant in Dholera, Gujarat, with production expected by late 2026.
• Tata Semiconductor Assembly and Test (TSAT) — $3.3 billion assembly, testing, marking, and packaging unit in Morigaon, Assam.
• CG Power, Stars Microelectronics (Thailand), and Renesas Electronics (Japan) — $918 million assembly, testing, marking, and packaging facility in Sanand, Gujarat, focused on microcontrollers, analog chips, and SoC — or “system-on-a-chip”— production.

These projects address India’s rising semiconductor demand with a key opportunity in legacy chips, which make up 95 percent of automotive semiconductors, making it a strategic market.

For local players, this is the perfect time to enter the semiconductor industry, but the opportunity is equally lucrative for global giants. Major international players have already invested, signaling confidence in India’s semiconductor ambitions. Applied Materials is investing $400 million in an engineering center, while Lam Research has pledged $25 million to set up a semiconductor training lab and train 60,000 Indian engineers. Foxconn is making a $600 million investment in Karnataka, and Corning has entered a $120 million joint venture for display glass finishing manufacturing. AMD is expanding its research and development operations with a $400 million investment, and Micron is leading the way with India’s first major semiconductor facility in Sanand, Gujarat—a $2.75 billion project supported by 50 percent central government funding and 20 percent state subsidies from Gujarat. Domestic giants like Vedanta, Reliance Industries, L&T, and Tata Electronics have expressed strong interest in the sector.

Challenges, strengths, and the road ahead

While the future looks promising, the return on investment remains uncertain. India faces several infrastructure and operational challenges, including the need for uninterrupted power, vast water resources, and high capital investment. The country also grapples with a talent gap in managing and scaling fabrication units. Securing sustainable funding and strategic partnerships is crucial; geopolitical competition from Taiwan, China, South Korea, and emerging players like Vietnam, Malaysia, and the United Arab Emirates may undercut India’s goal of capturing 20 to 25 percent of the global semiconductor value chain by 2047.

Despite these hurdles, India has key strengths that support its semiconductor ambitions. The country contributes 20 percent of the global semiconductor design talent, fostering a thriving “fabless” ecosystem—one that outsources its chip production. Abundant silica reserves and expertise in electric arc furnaces aid silicon wafer production, while geopolitical diversification is shifting supply chains toward India. Institutions like IISc Bangalore, IIT Bombay, and the Semiconductor Laboratory (SCL) drive chip research alongside government-backed initiatives like the Semiconductor Fabless Accelerator Lab (SFAL) and the Semicon India Program.

Given the government initiatives, infrastructure preparations, and rising private investments, India is rapidly emerging as a global semiconductor hub. The industry is projected to generate 1 million jobs by 2026. With a strong talent pipeline and over 50 semiconductor startups like Mindgrove, Signalchip, and Saankhya Labs driving AI-driven and automotive chip innovations, India is solidifying its place in the global semiconductor supply chain. As global giants set up operations, India is poised to become a high-tech manufacturing powerhouse, reducing import dependence and accelerating its economic transformation.

About the author

Svara Mehta graduated from Cornell University with a master’s in engineering management in 2024, where she served as degree marshal. What she learned from the Emerging Markets Institute (EMI) at the Cornell SC Johnson College of Business guided her toward a product management pathway, equipping her with essential skills for strategic decision-making. EMI has been a valuable resource in understanding trends in rapidly growing industries, shaping her perspective while navigating the semiconductor sector. She is currently a product manager at Applied Materials, focusing on digital solutions for semiconductor equipment. Passionate about technology and innovation, she integrates data science into manufacturing solutions. Outside work, she is a Bharatanatyam dancer and an enthusiastic traveler.