India’s semiconductor push: Why the $12 bn supply chain gap threatens 2030 chip ambitions

India semiconductor market 

The global semiconductor market is expected to grow from $775 billion in 2024 to $1.6 trillion by 2030, as per the report. India’s own semiconductor market is projected to reach $110-120 billion by 2030. The report added that India aims to cater to nearly 25% of global semiconductor demand by 2032. That share is expected to cross 35% by 2035.

To meet these targets, the country will need many more fabrication and packaging facilities, the report said. Just as important is the development of a dependable local supply chain.

Chip supply chain 

The report pointed out that capital equipment for projects approved under India Semiconductor Mission (ISM) 1.0 alone is estimated at $12-13 billion. This, it said, comes with a corresponding need for skilled talent and maintenance infrastructure.

The report cited Tata Electronics’ Dholera fabrication unit as an example. As per the report, the facility will need support from more than 400 suppliers. These vendors will eventually have to be based close to the fab, since maintenance and troubleshooting often need to happen on short notice.

To address this, Tata Electronics is developing a vendor park spread over more than 350 acres in Dholera, the report said. International vendors will be able to set up operations there on a plug-and-play basis. ASML’s plans in India were also flagged in the report. The company typically locates itself near its customers, so its entry is expected to further push supply chain development in the region.

Semiconductor Mission 2.0 

ISM 1.0 was approved in December 2021 with an outlay of Rs 76,000 crore, the report noted. Twelve semiconductor manufacturing units were cleared under the scheme, with cumulative investments crossing Rs 1.64 lakh crore. The six-year funding allocation was fully committed within four years, as per the report.

Five units are now in commercial production. These are Micron in Sanand, Kaynes, CG Semi, and, since September 17, CDIL in Mohali and Suchi Semicon in Surat. The report said all five are assembly, test, packaging or discrete-device facilities. India’s first commercial 300mm fab, being built by Tata Electronics along with PSMC in Dholera, is still under construction. Its technology portfolio will span 28nm to 110nm, the report said.

On the design side, the report noted that around 70,000 design engineers have been trained so far. EDA tools have been deployed across more than 500 organisations. More than 105 start-ups took part in the design programme, and about 20 of them raised roughly Rs 800 crore in venture funding.

ISM 2.0 was cleared by the Union Cabinet in July 2026 with an outlay of Rs 1,27,500 crore, according to the report. The scheme covers six areas: design, machines and materials, fabs, advanced packaging, applied R&D, and talent. Eligible fab categories include display, memory, silicon, compound and logic.

The report said the scheme targets 200 chip-design start-ups and companies. It also aims to train 100,000 technicians over five years, including through a partnership with Taiwan’s ITRI. Investment commitments worth about Rs 1 lakh crore have already been received, the report noted, though these are subject to board and shareholder approvals and are expected to play out over two to three years. Close to 100,000 jobs are projected from these commitments.

The Prime Minister, in his address at the event, said work on ISM 3.0 is already underway, the report said. Policy focus going forward is likely to remain on fab development, advanced packaging and design capabilities.

Global chip investments 

Applied Materials announced its India Vision 2035 at the event, committing USD 5 billion in investment over the next decade, the report said. The funds will go towards R&D, supply chain development, talent and scaling up global operations. As part of its R&D plans, the company is looking at expanding its existing India infrastructure and building a 140-acre Advanced Semiconductor Research Park in Bengaluru, according to the report.

On the supply chain front, Applied Materials plans to increase its India capacity tenfold by 2035, the report noted. It is targeting a network of more than 100 production and R&D suppliers. The company also entered partnerships with IITs and other universities, and said it aims to more than double its India R&D workforce by 2035. The report said this signals the company’s intent to position India as a contributor to its global operations, not just a domestic market.

Lam Research announced an investment of around Rs 10,000 crore to set up its first silicon-component manufacturing facility in India, as per the report. The facility is expected to have a vertically integrated manufacturing process, including silicon ingot-related processing and component manufacturing. The report said this is meant to support Lam’s semiconductor equipment operations and advanced technologies. The company is also expanding its India R&D footprint and has grown its Semiverse education programme in partnership with local universities.

Tata Electronics partnerships 

Tata Electronics entered into MoUs and partnerships with around 16 entities at the event, the report said. These cover its Dholera fab, its Jagiroad OSAT facility, and related areas such as materials, packaging, supplier ecosystem and talent.

Among the notable ones, Tata Electronics and Nexperia signed an agreement covering wafer manufacturing, assembly and testing, and technology collaboration, according to the report. Nexperia’s chips will be manufactured at the Dholera facility, with testing and assembly handled at Jagiroad.

The report also flagged a partnership between Tata Electronics and Fujifilm, focused on semiconductor materials, high-purity chemicals and local production for the Dholera fab. Fujifilm plans to invest around Rs 800 crore in phases to set up a materials plant in the Dholera Special Investment Region, with commercial production targeted for fiscal 2028, the report said.

A separate tie-up with JSR will focus on photoresists and advanced semiconductor chemicals, as per the report. Photoresists are described in the report as a critical material in fab operations. Tata Electronics also signed an agreement with BESI for advanced packaging capabilities at the Jagiroad facility in Assam.

Other collaborations announced by Tata Electronics include Semiconductor Laboratory, Ascendas First Space, which is setting up a 363-acre vendor park in Dholera, along with Sumitomo, Sojitz, Enomoto, Kelington, Inox Air Products and L&T Semiconductor Technologies, the report said. These cover equipment, materials, chemicals, gases, precision engineering, logistics and talent.

India chip manufacturing 

The report said Tata’s Dholera fab should be operational by 2028. Micron’s Sanand facility began manufacturing in February 2026, employing more than 2,000 people, according to the report. Tata Electronics representatives told the report’s authors that the approval process for their projects, from submission to receipt, took about 100 days.

The report also listed several other announcements from the event. Tokyo Electron plans to set up a fab-engineer training centre in Gujarat next year, in partnership with the Japanese government. CDIL in Mohali and Suchi Semicon in Surat began commercial production, taking the total number of operational units under ISM 1.0 to five out of the twelve approved. CDIL also announced a partnership with Shindengen to develop a power discrete package, while Suchi Semicon and eInfochips said they had packaged what they called India’s first commercial QFN chip.

Kaynes Semicon signed agreements with OptoML India, GridCrest Technologies and Sensesemi to work on advanced packaging and testing, the report noted. Sensesemi also announced a collaboration with Quest Global to integrate an India-designed chip into smart metering products. L&T Semiconductor Technologies unveiled 40 products, including a silicon carbide platform and a locally designed motor controller, as per the report.