India must seize the initiative in the semiconductor chip race
INDIA is a global leader in semiconductor chip design. Indian engineers make up nearly 20 per cent of the global chip design workforce, with over 125,000 contributing to cutting-edge development. Global giants such as Intel, AMD, Qualcomm and Nvidia have significant R&D and design bases in India. Yet, despite this strength, India lacks large-scale chip manufacturing, a critical gap that must urgently be bridged.
The semiconductor revolution began in the 1950s with the invention of the integrated circuit (IC) or the chip, which miniaturised electronic components and launched the digital age. Made primarily from silicon, today’s chips contain billions of transistors, tiny switches that control electrical signals, making devices faster, smaller and more efficient. Chips now power everything — from smartphones, smartwatches and laptops to cars, satellites, missiles and even smart cities.
Turning chip design into products is an ultra-precise process involving wafer fabrication, photolithography, etching, deposition, testing and packaging. Unlike design, which is software-driven, fabrication or “fab” requires atomic-level precision, ultra-clean environment, advanced machinery and reliable infrastructure. Only a few nations have mastered this complex and capital-intensive industry.
In today’s digital era, chips are as essential as electricity. Made from materials like silicon, germanium and gallium arsenide, they drive everything from ECG machines and smartphones to 5G networks, satellites and AI systems. Semiconductors are now among the world’s most strategic commodities, alongside oil and automobiles.
The global chip industry was valued at $627 billion in 2024 and is projected to exceed $1 trillion by 2030. Chips form the backbone of technologies like AI, robotics, quantum computing and driverless vehicles. No modern nation can grow, innovate or defend itself without secure chip access — those who control chip supply chains will shape the future of technological leadership.
According to Moody’s Analytics, India, along with Singapore and Malaysia, is emerging as a prime destination for chip manufacturing as global investors rush to meet soaring AI demand amid geopolitical tensions and economic uncertainty. India’s robust economy and vast digital talent pool further reinforce its rise as a potential semiconductor hub.
Beyond economic value, semiconductors are vital to national security. They power weapon systems, secure communications, satellites, and surveillance technologies, making them indispensable for both civilian and military use. Dependence on a handful of foreign suppliers exposes nations to geopolitical risks, supply disruptions and external pressure. Building domestic chip-making capabilities is thus not just an economic priority but a foundation for strategic autonomy and defence preparedness.
India’s domestic semiconductor market is expected to grow from $15 billion in 2020 to over $108 billion by 2030. Yet India still imports nearly all its commercial semiconductors, display cards and memory chips. Only two fabrication units exist: DRDO’s SITAR (Society for Integrated Circuit Technology and Applied Research) in Bengaluru and the Semiconductor Laboratory in Mohali, both serving defence and space sectors.
Events in recent years underline these risks. Covid-19, the US-China tech conflict and China’s curbs on gallium and germanium exports exposed the dangers of overdependence. Semiconductors have become national security assets. The US, European Union, Japan, South Korea and China are all investing billions to ensure domestic production and supply chain resilience.
India’s ambition to become a global semiconductor hub is not new. In 1976, it launched Semiconductor Complex Limited (SCL) in Mohali, one of the first such efforts by a developing nation. By the 1980s, SCL was making chips for satellites, telecommunications and radar systems, nearly matching global leaders. But a fire in 1989 gutted the facility and derailed progress. Though SCL resumed operations in 1997 and was later renamed ‘Semiconductor Lab’, it never regained its early momentum.
With the aim of reclaiming that momentum, India launched the Rs 76,000-crore Semicon India Programme in 2021 to build a comprehensive semiconductor ecosystem encompassing design, manufacturing, testing and R&D. This marked a serious push to reduce import dependence and position India as a global chip producer along with strengthening national security, economic self-reliance and leadership in next-generation technologies.
Still, building a fab is a marathon; it demands $5-20 billion in investment, strong policy backing and years of expertise. There is no margin for error — even a speck of dust or a minor power fluctuation can ruin an entire batch. Fabs need ultra-pure water, stable power, vibration-free sites and secure logistics.
In order to build a strong semiconductor manufacturing ecosystem, India must secure reliable supply chains for silicon wafers and specialty materials, and establish advanced testing and packaging facilities. Developing a skilled workforce of engineers, materials scientists and cleanroom technicians and aligning academic research with industry needs are equally important.
Fortunately, India’s strengths in design expertise, engineering talent, a booming consumer market and digital momentum offer a solid foundation. Strategic partnerships with the US, Japan, South Korea and Taiwan can bridge technology gaps and help integrate India into the global semiconductor value chain.
Already, US-based Micron is investing $825 million in a testing and assembly plant in Gujarat. Applied Materials is setting up a collaborative engineering centre in Bengaluru for chip-making equipment. Lam Research will train 60,000 Indian engineers in nanotechnology. Indian conglomerates such as Tata Group and Vedanta plan to establish fabrication units and forge global partnerships.
However, chip manufacturing demands strategic thinking, sustained capital and political resolve. As semiconductors become the “new oil” of the 21st century, India cannot afford to remain a passive consumer. It must become a producer.
A strong semiconductor industry will secure digital sovereignty, generate high-quality jobs, attract global investment and cement India’s position as a technology powerhouse. By advancing from chip design to chip fabrication, India will shape its technological destiny, one nanometer at a time.
SS Sekhon is former Professor, Guru Nanak Dev University.
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