Key facts
- India is accelerating its semiconductor industry initiative, Semicon 2.0, with a $13.4 billion outlay.
- The country's annual chip import costs are projected to reach $240 billion by 2035.
- A new 25 billion-rupee ($262.25 million) semiconductor facility has received its foundation stone in southern India.
- Global semiconductor manufacturing is concentrated in East Asia, creating risks and opportunities for diversification.
- India is enhancing cooperation with the US and Japan on semiconductor development and supply chains.
- The focus is shifting towards improving wafer yields, local expertise, and materials supply.
India is intensifying its efforts to establish a robust semiconductor industry, launching Semicon 2.0 with a substantial $13.4 billion outlay. This strategic push aims to curb the projected surge in chip-related imports, which are expected to reach $240 billion by 2035. Prime Minister Narendra Modi recently inaugurated a new semiconductor facility in southern India, marking a significant step in the country's ambitious chip-making initiative.
The global semiconductor landscape is undergoing a significant restructuring, with supply chains heavily concentrated in East Asian economies like Taiwan, South Korea, and China. This concentration presents both risks and opportunities, prompting governments and industry leaders to seek diversified manufacturing locations. India is positioned to benefit from this shift, leveraging its large market and political stability to expand advanced packaging, assembly, and selective manufacturing capabilities.
Strategic partnerships are crucial to India's semiconductor ambitions. Cooperation with the United States under the Initiative on Critical and Emerging Technology (iCET) is deepening, covering joint development, workforce training, and collaborative research. Similar technology and supply-chain partnerships have also been formalized with Japan.
India's domestic demand for chips is on the rise, driven by growth in consumer electronics, electric vehicles, telecommunications, and data centers. The country's chipmaking strategy is evolving beyond attracting foreign investment in fabs and assembly plants to building comprehensive capabilities. This includes improving wafer yields, adapting labor rules to meet manufacturing demands, and developing local expertise in materials and equipment.
Companies like Tata Electronics are focusing on achieving competitive yields at their planned facilities, a process that could take 24 to 30 months. Meanwhile, Kaynes Semicon is exploring opportunities in emerging technologies such as silicon photonics and neuromorphic chips, aiming to bypass traditional chipmaking gaps. The adaptation of labor rules, exemplified by Gujarat's approval of 12-hour work shifts for Micron Technology, highlights the proactive measures being taken by Indian states to attract and sustain semiconductor manufacturing.