India is at an inflection point in its semiconductor journey. At least eight factories are gearing up to begin large-scale production this year. Despite lacking companies that currently manufacture semiconductors, India is leveraging its expertise in chip design to carve out a niche in the global semiconductor market. Nearly 20% of the world’s semiconductor engineers are based in India. This focus puts the country in a stronger position to deepen its competitive edge in this foundational technology domain.
The semiconductor manufacturing process includes many complex steps, such as wafer fabrication and Outsourced Semiconductor Assembly and Test (Osat). Wafer fabrication entails etching circuits onto thin sheets of silicon using highly sophisticated and costly machines in large manufacturing facilities known as semiconductor “fabs.” Osat continues to directly cut silicon wafers into single chips. Then, it organizes them into packages, links them to contacts and campaigns, and sends them test runs.
Kaynes Semicon is definitely in the thick of action here. They proposed an investment of $260 million to establish a factory in the Indian state of Gujarat for assembling and testing computer chips. This investment underscores India’s potential to establish a robust semiconductor ecosystem. It prioritizes the areas of production where India has a clear competitive advantage.
Raghu Panicker, a senior semiconductor engineer at MITRE, highlighted the value of learning on less complex chip designs first.
“These are not glamorous chips, but they are economically and strategically far more important for India. You build an industry by first serving your own market. Complexity can come later. Scale has to come first.” – Raghu Panicker
India’s preeminence is limited to chip design, not creating the most advanced chips. Take the example of domestic fabless companies like Tejas Networks that design their chips entirely within India but rely on partners abroad for manufacturing. This approach arguably points to a shortcoming that India would like to fill by building up its domestic manufacturing capacity over time.
The third-stage of semiconductor production, Osat, is where Indian firms would have a more pointed focus. This phase is critical for ramping up our domestic production capacity. From R&D to delivery It includes many of the essential steps required to produce high-quality, functional semiconductors. Panicker described the exhaustive and intensive nature of this process.
“Packaging is not just putting a chip in a box. It’s a 10 to 12 step manufacturing process.” – Raghu Panicker
Success in semiconductor manufacturing doesn’t come without herculean effort. The industry requires a level of discipline and process control that goes pretty far beyond even other advanced manufacturing fields.
“Semiconductors demand a level of discipline, documentation and process control that is very different from traditional manufacturing. That cultural shift is as important as the technical one.” – Raghu Panicker
India’s own ambition to build a semiconductor ecosystem comes from the lessons learned during the COVID-19 pandemic. The pandemic revealed the fragility of global supply chains, spurring this effort in the first place. The pandemic exposed how a closure of a single region can result in unforeseen but severe impacts cascading throughout the global electronics manufacturing supply chain.
Amitesh Kumar Sinha highlighted the implications of this burden.
“Covid showed us how fragile global supply chains can be. If one part of the world shuts down, electronics manufacturing everywhere is disrupted.” – Amitesh Kumar Sinha
Given these challenges, India too is working on building its semiconductor ecosystem so as to reduce such risks while promoting resilience. It was refreshing to hear Sinha emphasize the need to develop a strong local manufacturing ecosystem.
“That’s why India is developing its own semiconductor ecosystem to reduce risk and increase resilience.” – Amitesh Kumar Sinha
In addition to these efforts, experts readily admit establishing a sustainable semiconductor industry will take time and patient capital. Sinha was definitely positive about the future direction of semiconductor manufacturing in India.
“Over the next decade, we expect a significant semiconductor manufacturing base to emerge in India and that will directly help companies like ours.” – Arnob Roy
This move toward a future role in the semiconductor industry will not be instantaneous. That will require significant investment—not just in physical infrastructure development, but training their workforce. Panicker noted that it takes years of training to get specialists in semiconductor manufacturing.
“Training takes time. You cannot shortcut five years of experience into six months. That is the single biggest bottleneck.” – Raghu Panicker
India is increasing its own semiconductor production capacity. To that end, the country intends to build an ecosystem that supports innovation and business development in the industry.