India has approved 12 semiconductor manufacturing projects worth more than ₹1.64 lakh crore, including its first commercial silicon fab and several chip packaging and testing facilities.

The government's original Semicon India Programme carried a ₹76,000 crore outlay. It has since expanded through Semicon 2.0, a new ₹1.27 lakh crore phase focused on design, advanced packaging, equipment, materials, research and talent.

Tata Electronics, Micron, HCL-Foxconn, CG Semi and Kaynes are among the companies leading India's manufacturing push — and three of them (Micron, Kaynes and CG Semi) have already begun commercial production.

India already designs close to 20% of the world's semiconductor chips, but manufactures almost none of them domestically. Building fabrication capacity is the next, much harder, challenge.

The race isn't just economic anymore. Chips have become one of the world's most important geopolitical assets.

Every smartphone. Every electric car. Every fighter jet. Every AI model. Every payment terminal.

They all run on one thing: semiconductor chips.

The global chip shortage during COVID-19 exposed just how dependent the world had become on a handful of manufacturers. Car factories shut down. Smartphone launches were delayed. Prices rose across industries.

Governments learned one lesson:

Whoever controls chips increasingly controls the future.

That is why India is spending billions trying to build an industry that took Taiwan, South Korea and the United States decades to master.

But can India really compete?

Or is this another manufacturing dream that stays on paper?

For decades, oil was the world's strategic resource.

Today, semiconductors are becoming just as critical.

A modern car contains between 1,000 and 3,000 chips. An AI data centre contains millions. Missiles, satellites, telecom equipment, medical devices and even household appliances all depend on semiconductors.

The global semiconductor market is expected to cross $1 trillion by 2030, driven by AI, electric vehicles, cloud computing and automation. India's own semiconductor demand is expected to grow rapidly as electronics manufacturing expands.

Here's the irony.

India is already a semiconductor powerhouse...

...just not in manufacturing.

Many of the world's biggest chip companies — including Intel, Qualcomm, AMD, NVIDIA and Texas Instruments — run major design centres out of Bengaluru, Hyderabad and Noida. Thousands of Indian engineers help design chips that power devices across the globe.

But once those designs are complete, they are sent abroad. Almost all manufacturing happens in Taiwan, South Korea, China or the United States.

India earns engineering salaries. Other countries earn manufacturing profits.

Designing chips is difficult. Manufacturing them is exponentially harder.

A semiconductor fabrication plant — or "fab" — can cost $10–20 billion before it produces a single chip. It requires:

A single dust particle can ruin an entire silicon wafer.

This is one of the most complex manufacturing processes ever created — which explains why only a handful of countries dominate global production.

Recognising the strategic importance of chips, the Indian government launched the Semicon India Programme in December 2021 with an outlay of ₹76,000 crore. Its objective isn't simply to build factories. It is to build an entire ecosystem covering:

Under this first phase, the government has approved 12 manufacturing units — one silicon fab, one silicon carbide fab, one integrated gallium nitride Micro LED display fab, and nine packaging units — with cumulative investment exceeding ₹1.64 lakh crore. Micron, Kaynes and CG Semi have already commenced commercial production, and another unit is expected to go live in 2026.

In July 2026, the Union Cabinet approved the next phase, Semicon 2.0, with a fresh outlay of ₹1.27 lakh crore. This phase widens the lens beyond fabrication alone, adding dedicated support for chip design, advanced packaging, semiconductor equipment, specialty materials, research and talent development — organised around six key pillars of the value chain.

Rather than betting on one flagship factory, India is attempting to build an industry.

If one company symbolises India's semiconductor ambitions, it is Tata Electronics.

Its flagship project in Dholera, Gujarat, developed with Taiwan's Powerchip Semiconductor Manufacturing Corporation (PSMC), is set to become India's first commercial silicon fabrication facility.

The project ranks among the largest manufacturing investments in Indian history.

Tata is also building an advanced semiconductor assembly and testing facility in Assam, adding capabilities beyond wafer fabrication.

The Tata Group isn't simply entering semiconductors. It is trying to build India's long-term manufacturing capability.

American memory-chip giant Micron Technology became one of the first major global companies to set up a semiconductor packaging facility in India.

Its Gujarat plant focuses on ATMP — Assembly, Testing, Marking and Packaging.

While this isn't full fabrication, it's an essential part of semiconductor manufacturing. Every chip still needs packaging before it reaches a smartphone, server or automobile — and Micron's facility is now in commercial production.

India's strategy is clear: start with packaging, build experience, expand into fabrication.

Foxconn became famous for assembling iPhones. Now it wants a seat in India's semiconductor ecosystem too.

Its joint venture with HCL will manufacture display driver chips in Uttar Pradesh, adding to India's backend manufacturing capabilities. Foxconn also remains a major player in India's broader electronics manufacturing ecosystem.

One of India's biggest long-term opportunities isn't manufacturing. It's chip architecture.

Most processors today rely on architectures licensed from companies like ARM or Intel. RISC-V changes that: it's an open-source processor architecture that lets companies, universities and startups design custom chips without paying steep licensing fees.

India has strongly backed RISC-V through research institutions, startups and semiconductor design initiatives. For a country with enormous engineering talent, this could become a genuine strategic advantage.

Rather than chasing existing chip giants, India could specialise in designing processors for:

This is where the headlines can be misleading.

A semiconductor factory doesn't operate in isolation. It depends on thousands of suppliers providing:

Countries like Taiwan spent decades building these supplier networks. Without them, fabs stay dependent on imports.

India's biggest challenge may not be constructing factories. It may be building everything around them.

India isn't entering an empty market. Every major economy is subsidising semiconductors.

The United States has the CHIPS Act. Europe has the European Chips Act. China continues pouring hundreds of billions into domestic chip production. South Korea and Taiwan already have decades of manufacturing expertise behind them.

The competition isn't simply about producing chips. It's about attracting the world's most advanced technology, equipment and talent.

Probably not in cutting-edge chips. At least not immediately.

Taiwan manufactures chips at 3nm and beyond. India's first fabs are expected to focus on mature process nodes, which remain critical for automobiles, industrial electronics, telecom equipment and defence systems.

Ironically, these "older" chips account for a huge share of global demand.

India doesn't need to beat Taiwan overnight. It needs to become indispensable in strategically important segments.

Semiconductors are no longer just another manufacturing sector. They sit at the intersection of:

For India, the goal isn't only import substitution. It's ensuring that future geopolitical shocks never leave the country dependent on a handful of overseas factories.

If successful, semiconductors could become for India what automobiles became for Japan or smartphones became for China.

If unsuccessful, billions in subsidies could produce expensive factories that struggle to compete globally.

The outcome will depend less on one flagship fab and more on whether India can build the engineers, suppliers, research ecosystem and innovation pipeline that sustain an industry for decades.

India's semiconductor ambition isn't really about making chips — it's about securing economic sovereignty in a world where technology has become a geopolitical weapon. Building a few factories is the easy part. Building an ecosystem that can innovate, compete and survive global competition is the real challenge. If India gets that right, the country's biggest export in the next generation may not be software — it could be silicon.

Disclaimer: The content published by The Signal India (TSI) is for informational and educational purposes only and should not be considered financial, investment, legal, or professional advice. Views expressed are those of the respective authors, and readers should conduct their own research and consult qualified professionals before making any decisions.

Images: AI-generated by The Signal India.
Research: Government of India press releases (PIB), Ministry of Electronics & IT, and current industry reporting.Compiled and fact-checked using publicly available sources as of August 2026.