How Indian MSMEs can power the global chip supply chain

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As the world searches for new, reliable manufacturing bases beyond traditional centres like China and Taiwan, Indian micro, small, and medium enterprises (MSMEs) companies have a chance to step into the global semiconductor supply.

Executives from chip manufacturing equipment and services firm Lam Research, outsourced semiconductor assembly and test (OSAT) firm Kaynes Semicon, and equipment maker Kastech Equipment, weighed in on the topic at the 28th Bengaluru Tech Summit.

The entire MSME sector contributes approximately 29 percent to India's GDP, and accounts for 40 percent of exports, according to NITI Aayog. India has recently approved several new semiconductor projects in Gujarat, Assam, Odisha, Punjab, and Andhra Pradesh.

For decades, Indian MSMEs have been the backbone of industries like automotive, aerospace, and industrial engineering. Now, experts believe these same manufacturers can pivot toward high-value semiconductor equipment and component production.

“There are more than ten thousand parts in a single piece of semiconductor equipment,” said Manjunath Jyothinagara, Managing Director at Kastech Equipment. “If even a few hundred of those components start getting made in India, it can transform hundreds of MSMEs into global suppliers.”

That spirit of collaboration is already taking shape. International companies are visiting India to explore partnerships, while Indian firms are setting up specialized facilities to meet global standards.

Paul Ilanghovan, Head of Operations at Kaynes Semicon, believes the learning curve will be steep but achievable. “Our engineering base is strong,” he said. “What we need is awareness, skill-building, and collaboration to meet the technical depth this industry demands.”

As semiconductor manufacturing expands globally, India’s small and medium enterprises could become the unsung heroes of the industry.

According to Alok Jain, Business Operations Leader at Lam Research India, the timing is ideal.

“COVID-19 disrupted the world’s supply chains and created an urgent need for diversification. India can be a natural partner to build resilience in the global chip ecosystem,” Jain said.

But it will require quality, precision, and partnerships with experienced players.