India Bets $13.2B on Semiconductor Ambitions to Diversify Global Supply Chains

Taiwan makes more than nine out of every ten of the world's most advanced semiconductor chips. That concentration of power in a single island has become impossible to ignore, especially after the COVID-19 pandemic exposed how fragile global supply chains really are. When chip shortages hit, automakers stopped their assembly lines. Hospitals struggled to get equipment. The vulnerability was stark: modern semiconductors power everything from smartphones and electric vehicles to aircraft and military systems, and almost all of them flow through one narrow chokepoint.

Now the world is moving. The United States, Japan, South Korea, and the European Union have all launched multi-billion-dollar programs to build semiconductor capacity at home or in allied nations. The goal is simple: never again be held hostage by geography and geopolitics. India, sensing both the necessity and the opportunity, is making its boldest move yet.

Last week, the Indian government approved a $13.2 billion program called Semicon 2.0, building on a $9 billion semiconductor mission launched five years earlier. The new initiative aims to construct an entire ecosystem—from chip design and fabrication to advanced packaging, specialty materials, equipment manufacturing, and workforce training. The ambition is staggering: India wants to build a domestic semiconductor market worth between $100 billion and $110 billion by 2030, and to meet up to three-quarters of the country's electronics demand through locally designed and manufactured chips.

India already has a foundation to build on. Thousands of engineers working for companies like Nvidia, AMD, Qualcomm, and Texas Instruments design some of the world's most sophisticated chips from research centers in Bengaluru, Hyderabad, and Noida. The design expertise is real and proven. But design is only half the battle. Manufacturing—the part that brings both economic value and strategic weight—is where India has lagged. So far, the country's progress has been concentrated in chip packaging and testing rather than in fabricating the chips themselves. V Kamakoti, director of the Indian Institute of Technology in Madras, frames the challenge plainly: India has the expertise to design sophisticated semiconductor chips, but manufacturing them at scale is the bigger hurdle.

The government is moving methodically. Micron Technology, a US memory chip maker, along with two Indian companies—Kaynes Semicon and CG Semi—have begun commercial production under the first phase of the program. Twelve fabrication and packaging projects have been approved, with three already in commercial production. Amitesh Kumar Sinha, chief executive of India's Semiconductor Mission, says convincing global companies to participate is no longer the difficult part. The hard part is what comes next: moving more of the semiconductor value chain into India itself.

Building a major chip manufacturer is one of the toughest industrial challenges any country can undertake. A single leading-edge fabrication plant costs more than $20 billion and demands uninterrupted electricity, vast quantities of ultra-pure water, and an extensive network of suppliers producing specialized chemicals, silicon wafers, and precision equipment. Kamakoti argues that India should first prove it can manufacture mature 28-nanometer chips reliably at scale before attempting the most advanced 3-nanometer processors used in high-end smartphones and AI systems. That approach is pragmatic: 28-nanometer chips will meet the majority of India's needs, and once that succeeds, the country can gradually move to more advanced technologies.

Timing may be on India's side. Geopolitical tensions and the rapid growth of artificial intelligence are forcing companies to rethink their supply chains. Demand for semiconductors is expected to rise sharply over the coming decade, creating what Sambit Sahu—a semiconductor industry veteran with more than three decades at Qualcomm and Intel—calls a window of opportunity. Building a semiconductor manufacturing ecosystem will be expensive and technically challenging, Sahu says, but with sustained investment and supportive policies, India could emerge as an important manufacturing hub within the next decade.

Not everyone is convinced India can close the manufacturing gap quickly. One senior semiconductor industry executive, speaking anonymously, predicted that India will remain stronger in chip design than fabrication for the foreseeable future, with the biggest near-term opportunities in packaging, testing, and mature-node manufacturing. Semicon 2.0 represents India's most ambitious attempt yet to enter the semiconductor race. Whether it succeeds will depend less on the billions pledged and more on the country's ability to turn those commitments into functioning factories, skilled workers, and a competitive manufacturing ecosystem.