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Market Reports

India’s Semiconductor Industry

UJA Market Reports - India’s Semiconductor Industry

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Quick Facts: India’s Semiconductor Industry

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Overview of Indian Semiconductor Industry

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Key Companies Investing in India’s Semiconductor Industry

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Government Initiatives

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Megatrends in Semiconductor Industry

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Why Invest in India’s Semiconductor Industry?

Quick Fact: India’s Semiconductor Industry

  • The Indian government has allocated INR 760 Bn under the India Semiconductor Mission (ISM) to develop a domestic semiconductor and display manufacturing ecosystem.
  • India’s semiconductor industry currently represents only 3% of the global market.
  • India’s semiconductor industry currently employs around 220,000 professionals, with plans to expand the workforce by 1 million jobs by 2026.
  • As of 2025, women represent 25% of India’s semiconductor workforce, with expectations to rise to 35% by 2030.
  • Annually, India produces around 600,000 engineering graduates in electronics-related fields.
  • India allows 100% Foreign Direct Investment (FDI) in electronics manufacturing under the automatic route, except for countries that share a land border with India.
  • The Indian government offers up to 50% fiscal support for semiconductor fabrication units and has introduced initiatives such as Production Linked Incentive (PLI) and Semiconductor and Display Manufacturing Scheme (SPECS) to foster domestic manufacturing.
  • India has signed agreements with countries like the USA, Japan and the EU to strengthen its semiconductor supply chain and foster innovation.

Overview: of Indian Semiconductor Industry

Overview of Indian Semiconductor

The Indian semiconductor industry is rapidly evolving, with ambitious goals set for its growth and self-sufficiency. India has long relied on imports to meet its semiconductor needs, primarily due to the lack of domestic fabrication facilities. Currently, India is highly reliant on semiconductor imports, accounting for approximately 95% of its semiconductor requirements. However, the government is striving to change this by investing heavily in domestic production. Under the India Semiconductor Mission (ISM), INR 760 Bn has been allocated to foster the development of semiconductor manufacturing in India, with a target to achieve an INR 8,900 Bn market by 2030.

Historically, the semiconductor value chain, encompassing design, production and sales, has been concentrated in regions like the US, South Korea, Taiwan, Japan, Netherlands and China. However, disruptions caused by the pandemic and rising labour costs have prompted global manufacturers to seek alternatives to China. As a result, India has emerged as a key location for back-end assembly and testing operations, with growing potential for front-end manufacturing in the coming years. The country is now making strides in establishing itself in the global semiconductor market and is on track to become a significant hub for semiconductor manufacturing in the future.

UJA Market Reports - Emerging Semiconductor Hubs – India

Key Companies Investing in India's Semiconductor Industry

Tata Electronics

  • Tata Electronics, a part of the Indian conglomerate Tata Group, is also playing a pivotal role in India’s semiconductor industry.
  • The company is investing more than INR 910 Bn to establish a semiconductor fabrication plant in Gujarat. This facility, with a production capacity of 50,000 wafers per month, will cater to the growing demand for semiconductors in automotive and consumer electronics.
  • This is a major step towards reducing India’s dependency on semiconductor imports and boosting domestic manufacturing capabilities.

Foxconn and HCL

  • Foxconn, a leading Taiwanese electronics manufacturer, is making significant investments in India’s semiconductor sector.
  • In collaboration with HCL Technologies, Foxconn has secured approval for a joint venture to set up a semiconductor packaging and testing unit in Uttar Pradesh. This facility aims to create a robust supply chain for electronic components, especially for the display and automotive sectors, positioning India as a key player in the global semiconductor market.
  • The investment is part of a broader effort to diversify production away from China and tap into India’s growing market. Foxconn is likely to invest INR 3,240 Mn, representing 40% of the total investment, while HCL’s investment covers the remaining INR 4,860 Mn, bringing the total investment to INR 8,100 Mn.

Micron Technology

  • Micron Technology, an American memory and storage solutions provider, is also expanding its footprint in India.
  • In partnership with the Indian government, Micron has announced plans to invest INR 231 Bn in a semiconductor assembly and testing facility. This is part of the company’s broader strategy to diversify its production away from China and cater to the growing demand for memory chips in the region.
  • Micron will receive 50% fiscal support for the total project cost from the Indian central government and incentives representing 20% of the total project cost from the state of Gujarat.
  • Micron’s entry into India marks an important milestone in the country’s push to become a semiconductor manufacturing hub.

Indichip Semiconductors Limited and Yitoa Micro Technology Limited

  • The Andhra Pradesh Government has signed a MoU with Indichip Semiconductors Limited and its joint venture partner, Yitoa Micro Technology Limited (YMTL) of Japan, to establish a semiconductor manufacturing facility with an investment exceeding (INR 140 bn) in January 2025.
  • The facility, initially designed to produce 10,000 wafers per month, with plans to scale up to 50,000 wafers within 2-3 years. To support this, the state government recently announced a separate policy aimed at making Andhra Pradesh a hub for semiconductor manufacturing.
  • The government will allocate land in the Orvakal Mega Industrial Hub in Kurnool and provide the necessary infrastructure and ecosystem to fast-track the establishment of the unit.

Government Initiatives

India Semiconductor Mission (ISM)

  • The India Semiconductor Mission (ISM) is a government-led initiative aimed at transforming India into a global semiconductor manufacturing hub. Launched in December 2021, the mission has a budget allocation of INR 760 Bn to develop a comprehensive semiconductor ecosystem in the country.
  • The mission’s goals include setting up semiconductor fabs, display fabs and assembly, testing and packaging units. ISM includes several key schemes to accelerate semiconductor development.
  • The Semiconductor Fabs Scheme provides financial support for setting up semiconductor fabrication units in India, offering up to 50% of the project cost as an incentive.
  • Similarly, the Display Fabs Scheme focuses on establishing advanced display fabs, with financial assistance of up to 50% for capital expenditure.
  • OSAT/ATMP scheme Extends fiscal support of 50% of the capital expenditure on a pari-passu basis and DLI scheme Offers a “Product Design Linked Incentive” of up to 50% of eligible expenditure.

Chips to Startup (C2S) Program

  • The Chips to Startup (C2S) program, launched by the Ministry of Electronics and Information Technology (MeitY), aims to boost India’s semiconductor design and innovation capabilities.
  • It focuses on training 85,000 engineers in VLSI and Embedded System Design over five years and fostering the development of Application-Specific Integrated Circuits (ASICs) and System-on-Chip (SoC) prototypes. The program is implemented across 100 academic institutions and research organizations, including IITs, NITs and private colleges and offers opportunities for startups and MSMEs to collaborate on chip design projects.
  • A key feature is the ChipIN Centre at C-DAC, providing access to advanced Electronic Design Automation (EDA) tools for chip design up to 5nm technology nodes, supporting the entire design process.

Strategic International Collaborations

India has been actively forging international partnerships to bolster its semiconductor capabilities, aligning with its strategic goal of becoming a global hub for chip manufacturing and design. Key agreements include:

  • United States:
    In March 2023, India and the U.S. signed a Memorandum of Understanding (MoU) to establish a semiconductor supply chain and innovation partnership, focusing on research, development and workforce training.
  • European Union:
    In November 2023, India and the EU signed an MoU to deepen cooperation in the semiconductor ecosystem, aiming to enhance supply chain resilience and promote joint research and innovation.
  • Japan:
    In July 2023, India and Japan signed an agreement to develop a semiconductor ecosystem, focusing on manufacturing, design, research, talent development and supply chain improvements.
  • Singapore:
    In September 2024, India and Singapore signed an MoU to enhance collaboration in semiconductor manufacturing, talent development and knowledge sharing, leveraging Singapore’s expertise in the sector.
  • Taiwan:
    India and Taiwan have been cooperating on building strong supply chains for critical minerals, advanced materials and semiconductors, aiming to enhance bilateral collaboration in these sectors.

India to Develop Indigenous 2nm GPU by 2030:

  • India is planning to build its own advanced 2-nanometre (nm) graphics processing unit (GPU) by 2030 in a bid to reduce its reliance on US-based chipmakers for core AI technology. The ambitious project will be led by engineers at the Centre for Development of Advanced Computing (C-DAC) in Bengaluru and is backed by funding of around INR 17,000 Mn.
  • This homegrown GPU is being designed completely from scratch to match the capabilities of the most advanced chips expected globally by the end of the decade. Industry trends suggest that by 2028, leading companies like NVIDIA will be producing GPUs based on the 2 nm manufacturing process. By targeting the same level of advancement, India hopes to be on par with global players when it enters 2030.
  • Once the chip design is ready, the government is likely to team up with Taiwan Semiconductor Manufacturing Company (TSMC), one of the world’s leading chip manufacturers. This partnership would help produce the chips at scale and potentially at half the cost, making the project not just technically competitive but also economically viable.

Megatrends in Semiconductor Industry

Innovations in Wafer Materials

As the semiconductor industry continues to evolve, new materials are emerging to meet the growing demands of advanced technologies. These materials are crucial for enhancing the performance, efficiency and capabilities of semiconductor devices across various applications.

  • Silicon (Si): The most common material, used primarily in logic circuits, microprocessors and memory devices due to its moderate electron mobility and availability.
  • Gallium Arsenide (GaAs): Known for high electron mobility and a direct bandgap, ideal for high-frequency and optoelectronic applications such as RF devices and microwave amplifiers.
  • Silicon Carbide (SiC): Features a wide bandgap and excellent thermal conductivity, making it suitable for power electronics, electric vehicles and high-temperature industrial applications.
  • Indium Phosphide (InP): Offers high electron mobility and a direct bandgap, used in high-speed and high-frequency applications like fiber optics and laser technology.

Advance Packaging

Advanced packaging has emerged as a pivotal megatrend in semiconductor manufacturing, driven by the escalating demands of artificial intelligence (AI), 5G connectivity and high-performance computing. This approach enables the integration of multiple chips into a single package, enhancing performance, reducing power consumption and optimizing space utilization. Key Innovations in Advanced Packaging:

  • 3D Integrated Circuits: Stacking multiple chip layers vertically, reducing data transfer distances and enhancing bandwidth and power efficiency. This technique is particularly beneficial for memory applications and AI systems.
  • System-in-Package (SiP): Integrating multiple dies, passive components and even micro-electromechanical systems (MEMS) into a single module, offering multifunctionality in a compact form factor. This is widely used in wearable technology, IoT devices and smartphones.
  • Thermally Enhanced Packaging: As chip performance increases, efficient thermal management becomes crucial. Advanced packaging solutions incorporate materials and designs that facilitate better heat dissipation, ensuring the reliability and longevity of components.

Why Invest in India’s Semiconductor Industry?

Strong Government Support and Policy Initiatives

  • Semicon India Program:
    The Indian government launched this incentive program in 2021 to promote semiconductor and display manufacturing.
  • PLI Scheme (Production Linked Incentives):
    Over INR 160 billion allocated specifically for semiconductor and electronics manufacturing under PLI to boost domestic production.
  • Design-Linked Incentive (DLI) Scheme:
    Offers up to 50% financial support for semiconductor design startups and MSMEs.
  • Fast-Track Approvals & Single-Window Clearances:
    The government has created dedicated facilitation centers to speed up large-scale investment approvals.

Rapidly Growing Domestic Demand

  • Electronics Market Boom:
    India has set a target to achieve INR 25,401 billion in electronics manufacturing and INR 10,160 billion in exports by 2025-26.
  • Automotive and EV Growth:
    Increasing demand for automotive electronics, especially EVs, is boosting semiconductor consumption.
  • Telecom & 5G Rollout:
    With 5G services expanding, demand for semiconductor components in network equipment and mobile devices is surging.

Emerging Fab and OSAT Facilities

  • New Foundries in Pipeline:
    Tata Group, RRP Electronics Ltd., Kaynes Technology, and others have announced investments totaling over INR 1,600 billion in semiconductor fabs and OSAT (Outsourced Semiconductor Assembly and Test) units.
  • OSAT & ATMP Momentum:
    India is focusing on packaging and testing capabilities to become a key player in the backend semiconductor supply chain.
  • Supportive Power & Water Infrastructure:
    State governments are offering concessions on utilities and land acquisition for fab setup.
  • Import Substitution:
    India imports over 95% of total semiconductors annually, presenting a strong case for domestic production.

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