India’s semiconductor ambitions took a big leap forward last week when CG Semi—a Murugappa Group subsidiary— announced that it would roll out the first Made-in-India chip by the end of the year. The announcement came just days after the Union Cabinet approved four semiconductor projects, taking the total number of approved chip manufacturing facilities in India to 10, including the Tata Group’s partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp to make mature chips. The latest approvals push up the projected investments in semiconductor projects to about `1.6 lakh crore across six states. Many might, with some justification, argue that the investment and the ambition is just too small to make any significant impact, but at least it’s a good beginning after decades of missed opportunities. It’s also encouraging that the government is giving final shape to the second phase of the India Semiconductor Mission (ISM), with most of the fiscal support earmarked under the first phase already committed. At the Semicon India 2025 on Tuesday, Prime Minister Narendra Modi gave it the necessary urgency by saying what the country now needs is “less paper work and more wafer work”.
Strategic urgency in chipmaking
It’s important that India moves fast beyond the back end to become a full-stack semiconductor nation as the stakes are extraordinarily high. These tiny chips are the foundation for critical technologies like artificial intelligence (AI), quantum computing, and renewable energy. But the geopolitical shocks of the Covid-19 pandemic and the Ukraine conflict exposed vulnerabilities in the global semiconductor supply chain, dominated by a few nations like Taiwan, South Korea, China, and the US. The growing protectionism and weaponisation of chip trade by countries such as the US has only heightened this concern.
India’s push for local manufacturing and design is thus both a strategic and economic response to reduce reliance on such concentrated geographies. The good news is that the money has already been committed to a host of projects and disbursements have begun. With all projects put together, including the ones states have cleared, India will have the capacity to produce 95 million chips per day, which is a good start. With the global market touching over $100 billion by 2030, India is expected to account for 8-10% of the estimated $1-trillion global chip sales.
Challenges in fabs and talent
However, in terms of producing wafers in fabrication plants, a lot of ground needs to be covered. Most countries are working on building them domestically. Many are offering mega subsidies to attract big fabrication players. Between the US, China, European Union, Japan, South Korea, and Taiwan, these subsidies account for over $388 billion. While India has only one mega fab plant under construction, China has 44, Japan 12, Taiwan 14, Europe 10, and the US 15. There is no doubt that India is titled too much towards outsourced semiconductor assembly and test (OSAT), and assembly, testing, marking, and packaging (ATMP) plants, for which over seven projects have been cleared. The other aspect requiring attention is that India faces a significant semiconductor skill shortage, with projections showing a need for potentially over 500,000 to one million professionals by 2030. While the country aims to meet this demand through initiatives like the Skill India Semiconductor Programme, there is an urgent need for faster upskilling through partnerships between industry, academia, and government. India is a late entrant to the semiconductor party, so the road ahead is certainly not easy.