Can India Become a Global Player in the Semiconductor Industry?

Key Highlights

• India designs chips but still relies on overseas manufacturing
• Around 20% of the world’s semiconductor engineers work in India
• Government policy targets assembly, testing, and packaging (OSAT)
• New plants aim to reduce dependence on Taiwan and China
• Covid-era shortages accelerated India’s semiconductor push

Introduction

India already plays a major role in the global chip industry. However, that role remains incomplete. While Indian engineers design advanced semiconductors, foreign factories still manufacture most of them.

Now, that reality is changing. India is moving to build its own semiconductor ecosystem. As global supply chains fracture, policymakers and businesses see an opening for India to become a more serious player.

Why Chips Matter to Indian Technology Firms

For companies like Tejas Networks, semiconductors sit at the core of operations. Tejas supplies equipment that powers mobile and broadband networks across India and beyond.

According to co-founder Arnob Roy, telecom chips differ sharply from consumer chips. They must handle massive data volumes without failure. Reliability matters more than raw speed.

India already designs many of these specialized chips. However, companies still send designs overseas for manufacturing. That dependence proved risky during the pandemic.

Covid Exposed Supply Chain Vulnerabilities

During Covid-19, chip shortages rippled across industries. Production stalled. Costs rose. Delays mounted.

As a result, Indian policymakers reassessed their strategy. According to Amitesh Kumar Sinha, the crisis showed how concentrated semiconductor manufacturing had become.

Consequently, India decided to reduce risk by developing domestic capabilities.

Where India Fits in the Chip-Making Process

Chip production involves three major stages. First comes design, where India already excels. Second comes wafer fabrication, or “fabs,” which require massive capital and advanced machinery. Taiwan dominates this stage.

The third stage involves slicing wafers, packaging chips, and testing them. This process is known as OSAT.

India has chosen to start here.

Assembly and Testing: India’s Entry Point

According to India Electronics and Semiconductor Association, assembly and testing offer the fastest path forward. These steps require less capital than fabs but still deliver strategic value.

Several OSAT plants are expected to enter mass production this year. This move helps India build scale, skills, and operational discipline.

Kaynes Semicon Shows Early Progress

Founded in 2023, Kaynes Semicon became the first firm to launch a government-backed semiconductor plant.

The company invested $260 million in a facility in Gujarat. Production began in late 2025. The plant focuses on chips for cars, telecom networks, and defense systems.

CEO Raghu Panicker stresses realism. India does not need the most advanced AI chips on day one. Instead, it needs volume, reliability, and domestic demand.

Challenges Remain Significant

Despite progress, hurdles remain. Training skilled workers takes years. Cleanroom construction demands precision. Process discipline requires cultural change.

Panicker notes that experience cannot be rushed. Workforce development now stands as the biggest bottleneck.

Still, momentum continues to build.

What Comes Next for India’s Chip Ambitions

Back in Bangalore, Tejas Networks expects benefits over the next decade. As domestic suppliers emerge, companies can source more components locally.

Eventually, India may design and manufacture complete chipsets. However, that outcome will require patience, capital, and sustained policy support.

Conclusion

India will not replace Taiwan overnight. Yet the country no longer wants to sit on the sidelines.

By starting with assembly and testing, India is laying the groundwork for a resilient semiconductor industry. Over time, that strategy could reshape both domestic manufacturing and global supply chains.