India’s journey towards becoming a major player in the global semiconductor industry has finally
picked up pace. While the country has historically lagged behind the likes of Taiwan, the USA,
South Korea, and China, the Indian government has recently unveiled an ambitious plan to
develop its own semiconductor ecosystem. The Semiconductor Mission is now a cornerstone
of India’s technological aspirations, aiming to address the growing demand for chips and reduce
reliance on imports.
This blog will take a deep dive into the evolution of India’s semiconductor sector, highlighting
government policies, investments, partnerships, the current progress of factories, and the
roadmap to addressing the critical talent gap in this high-tech industry.
1. Semiconductor Industry Overview: A Complex and Multi-Layered Sector
The semiconductor industry is intricate, involving several key stages such as chip designing,
fabrication (wafer production), testing, packaging, and final assembly. Each stage requires
a highly specialized ecosystem that involves chemicals, gases, power supply, clean room
infrastructure, and advanced testing equipment. Furthermore, semiconductor manufacturing
demands a stable and continuous supply of electricity and water.
However, one of the biggest challenges for India lies in the lack of skilled manpower.
Semiconductors require highly specialized engineers, scientists, and technicians who are
currently in short supply. This gap poses a significant hurdle in building the domestic chip
industry.
2. India’s Semiconductor Mission: Government Policies and Schemes
To jumpstart the semiconductor industry, the Indian government has launched various policies
and schemes to attract investments, technology partnerships, and infrastructure development.
Key initiatives under the India Semiconductor Mission (ISM):
● Production-Linked Incentive (PLI) Scheme: Launched with an outlay of ₹76,000 crore
($10 billion) to provide financial support for companies investing in semiconductor
manufacturing. It aims to boost manufacturing capacity, encourage innovation, and
promote design capabilities within India.
● Design Linked Incentive (DLI) Scheme: To promote local semiconductor design, the
DLI scheme provides financial and infrastructure support to startups and established
companies working in chip design and related areas.
● Electronics Manufacturing Clusters (EMC) 2.0: This scheme offers financial
incentives to develop world-class infrastructure for electronics manufacturing, including
dedicated semiconductor clusters.
● Technology Development and Incubation Centers: The government has set up
several incubation centers to help new semiconductor firms, particularly in the areas of
R&D and small-scale production.
Timelines and Milestones:
India’s semiconductor mission is focused on long-term growth. The goal is to set up fabrication
plants (fabs) within the next 5-7 years. The initial target is to have operational fabs by
2025-2026, with design and packaging capabilities ramping up simultaneously.
3. Current Status of Progress: Setting Up Factories in India
Partnerships with Global Giants:
India has signed multiple agreements with global leaders in the semiconductor industry, marking
a significant step towards establishing its own manufacturing capacity.
● Vedanta-Foxconn Partnership: Vedanta, a major Indian conglomerate, partnered with
Foxconn, a Taiwanese electronics manufacturing giant, to set up a $19.5 billion
semiconductor manufacturing facility in Gujarat. This is one of India’s most promising
ventures in chip fabrication.
● ISMC Analog Fab: A consortium of NextOrbit Ventures and Tower Semiconductor
(Israel) has announced a $3 billion investment to set up a 65nm analog semiconductor
fab in Karnataka.
● STMicroelectronics and Tata Group: The Tata Group is in talks with
STMicroelectronics and other global players to enter semiconductor manufacturing,
focusing on packaging and testing facilities.
Investments and Infrastructure Development:
● Micron Technology: The US-based Micron Technology has shown interest in setting
up a semiconductor packaging plant in India, reinforcing the country’s potential in
backend operations.
● Gallium Nitride (GaN) Semiconductor Production: A few domestic startups,
supported by government funding, are focusing on niche areas like GaN
semiconductors for power electronics, which are crucial for electric vehicles and
renewable energy technologies.
● Silicon Valley Innovation Hub: India is also planning to establish semiconductor
research hubs in collaboration with Silicon Valley to foster innovation and train skilled
workers.
4. Addressing the Talent Gap: Skilling India’s Workforce
One of the most significant challenges for India’s semiconductor sector is the shortage of
skilled talent. Semiconductor manufacturing requires expertise in fields like electrical
engineering, physics, material science, and chemistry—skills that are currently in limited
supply in India.
To bridge this gap, the Indian government and private sector are taking the following steps:
1. University-Industry Collaborations:
● Partnerships with global universities and Indian IITs (Indian Institutes of Technology) are
being forged to develop specialized courses on semiconductor design, materials, and
manufacturing.
● Government-backed skilling programs are focusing on providing graduate and
postgraduate-level training to engineers, emphasizing VLSI design, chip fabrication,
and advanced electronics.
2. International Talent Exchange:
● India is also partnering with countries like Taiwan, Japan, and the USA to exchange
talent and provide Indian engineers with exposure to state-of-the-art fabs and
production lines.
3. Skilling Initiatives:
● The Semiconductor Workforce Development Program is being implemented to train
85,000 engineers in the next five years, focusing on critical areas like chip design,
quality control, and process management.
4. Private Sector Involvement:
● Companies like Intel and Cadence are offering internships and short-term courses to
upskill young talent, while global firms setting up fabs are investing in local training
centers.
5. A Use Case for Investors: Betting on India’s Semiconductor Ecosystem
For investors looking to capitalize on India’s burgeoning semiconductor sector, several
companies are well-positioned to benefit from this ecosystem:
1. Tata Elxsi
Tata Elxsi is a leading player in VLSI design and embedded systems. As India ramps up its chip
design capabilities, Tata Elxsi is expected to play a key role in the R&D and design segment of
the semiconductor industry.
2. Vedanta
With its Foxconn partnership, Vedanta is directly involved in setting up fabrication facilities in
India. Investors can expect this company to be at the forefront of India’s semiconductor
manufacturing push.
3. ASM Technologies
ASM Technologies focuses on semiconductor design and services for chip manufacturing.
With the DLI scheme encouraging design innovation, ASM is well-positioned to take advantage
of this growth.
4. Dixon Technologies
Dixon Technologies has ventured into semiconductor packaging and assembly services.
Given that backend services like testing and packaging are critical to the semiconductor supply
chain, Dixon is set to benefit from India’s push for a complete semiconductor ecosystem.
5. Reliance Industries
Reliance is actively exploring green energy and semiconductor materials, aiming to enter the
semiconductor supply chain at a fundamental level. This could make Reliance a long-term
player in India’s semiconductor landscape.
Conclusion
India’s semiconductor mission is ambitious but achievable. With strong government support,
foreign collaborations, and a clear roadmap for infrastructure development, India is on the
right path to becoming a key player in the global semiconductor industry. However, the success
of this mission will depend heavily on skilling the workforce, building the right
infrastructure, and maintaining policy consistency.
For investors, the evolving semiconductor sector presents a unique opportunity to invest in
companies that are poised to benefit from this ecosystem, ranging from chip designers to
equipment manufacturers and backend service providers. The semiconductor revolution in
India has begun, and its future looks bright
India’s Semiconductor Mission: Catching Up in the Global Chip Race