India’s semiconductor dreams just got a fresh boost. On May 14, the Union Cabinet approved a new semiconductor manufacturing facility, a joint venture between HCL and Taiwanese electronics giant Foxconn. The facility will be set up near the upcoming Jewar airport in Uttar Pradesh, within the Yamuna Expressway Industrial Development Authority (YEIDA) region.
The new unit will focus on producing display driver chips, key components in mobile phones, laptops, cars, and other digital displays. With an investment of Rs 3,700 crore, the plant will have the capacity to process 20,000 wafers every month, churning out around 36 million units monthly.
“With this sixth unit, Bharat moves forward in its journey to develop the strategically vital semiconductor industry,” the government said in a statement.
Let’s break down what this means for India’s chip ecosystem and how close the country is to becoming a serious player in the global semiconductor game.
What is the India Semiconductor Mission (ISM)?
Launched in 2021 under the Ministry of Electronics and Information Technology (MeitY), the India Semiconductor Mission (ISM) is India’s flagship programme to develop a full-stack semiconductor ecosystem, from design to manufacturing and testing. The ISM comes with a financial outlay of Rs 76,000 crore (around $10 billion) and is tasked with implementing key incentive schemes and policy initiatives.
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The mission aims to reduce India’s dependence on chip imports (currently 65–70 percent of electronic components are imported, mostly from China), boost domestic production, and make India a hub for global chipmakers.
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The Players in India’s chip push
In just a few years, India has managed to draw the attention of global chip majors. Here's a look at who’s doing what:
- Tata Group & Powerchip (Taiwan): Rs 91,526 crore fab in Dholera, Gujarat, expected to begin production by end-2026.
- Micron Technologies (US): ATMP facility in Sanand, Gujarat, focuses on memory packaging and testing.
- Foxconn-HCL (New): Rs 3,700 crore display driver chip facility near Jewar, Uttar Pradesh, the sixth approved unit.
- Tata Electronics (Assam): Advanced packaging (ATMP) unit, set to start production by mid-2025.
- CG Power, Renesas, STARS Microelectronics: OSAT facility in Sanand, Gujarat for outsourced testing and packaging.
- Kaynes Technology: Another OSAT facility in Sanand, Gujarat, approved in Sept 2024.
Why is India chasing semiconductors?
India’s semiconductor market was valued at $45 billion in 2023 and is expected to cross $100 billion by 2030, according to an Economic Times report. This growth is powered by a booming demand for smartphones, laptops, electric vehicles, medical devices, and defence systems, all of which need chips.
India is now the world’s second-largest market for 5G smartphones (after China), making it a natural growth zone for chip demand.
But it’s not just about demand. Semiconductors are critical to national security and technological sovereignty. The global chip shortage during COVID-19 exposed how vulnerable economies can be without domestic production capabilities.
Government support and strategic push
- The government is rolling out a full-fledged ecosystem approach. Key initiatives include:
- Semicon India Programme: Central and state subsidies up to 70 percent for setting up fabs, testing, and design units.
- PLI for Large-Scale Electronics: Helped generate over Rs 5 lakh crore worth of production since 2020.
- SPECS Scheme: Offers 25 percent capital subsidy on investments in chip components and electronics.
- Chips-to-Startup (C2S) Programme: Training 85,000 engineers in chip design, VLSI, and embedded systems across 113 institutions.
- Design-Linked Incentive (DLI): Promoting Indian IP creation in chip design.
More than 70 startups and 270 institutions are working on semiconductor innovation in India. Twenty of these products have already been taped out at the modernised Semi-Conductor Laboratory (SCL) in Mohali.
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Challenges on the road ahead
Despite the optimism, India’s semiconductor ambitions face some tough headwinds:
Capital Intensive: Building a semiconductor fab can cost upwards of $10 billion and takes years to become profitable, officials closely associated with ISM told Mint.
Skilled Manpower Shortage: India is staring at a talent gap of 250,000–300,000 skilled professionals by 2027, according to a TeamLease report.
Supply Chain Bottlenecks: India currently lacks a robust ecosystem of raw material suppliers, cleanroom infrastructure, and high-precision chipmaking tools.
Global Dominance of a Few: Taiwan and South Korea dominate 80 percent of the chip manufacturing market (Centre for Strategic and International Studies). Advanced chip-making still hinges on ASML’s EUV lithography machines, a monopoly held by the Netherlands.
India is leveraging diplomacy to build strategic tech alliances. It is part of the Quad’s semiconductor supply chain initiative with the US, Japan, and Australia. Agreements have also been signed with Japan and the EU for R&D and ecosystem collaboration.
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There’s even talk of the first US-India defence semiconductor unit coming up in Uttar Pradesh, which could place India in the elite league of complex chipmakers.
According to experts cited by Observer Research Foundation and the Carnegie Endowment for International Peace, India needs a Taiwan-style strategy, combining policy, talent, innovation, and institution building. A proposed India Semiconductor Research Centre (ISRC), akin to Taiwan’s ITRI, could help drive this vision forward. And with the global chip market expected to hit $1 trillion by 2030, India is aiming for a 10 percent share.
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