How India’s Forgotten Silicon Story Found Its Stride

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India’s silicon dreams just got a leg up on Tuesday, with Union Minister Ashwini Vaishnaw announcing Cabinet approval for four additional semiconductor manufacturing projects under the India Semiconductor Mission (ISM). 

“Four new semiconductor projects have been cleared in addition to the six approved earlier. These are in Odisha, Andhra Pradesh, and Punjab, at an investment of Rs 4,594 crore,” the minister said. 

Earlier in May, the minister inaugurated two semiconductor design centers—one in Noida and another in Bengaluru. These are India’s first centers focused on 3-nanometer (nm) chip design, one of the most advanced in the world, signalling that the country is no longer content with being a backend player in global electronics.

“Designing at 3 nanometers is truly next-generation. India had previously achieved 7nm and 5nm designs, but this development marks a new frontier in semiconductor innovation,” the minister said at the launch.

These milestones come at a time when India’s semiconductor market is experiencing remarkable growth, up from $38 billion in 2023 to an estimated $45–50 billion by 2025, and is projected to reach $100–110 billion by 2030.

India and Semiconductors 

Speaking to MIT SMR India, V Veerappan, Co-Founder & President of Tessolve Semiconductor and Chairman of India Electronics & Semiconductor Association (IESA), reflected on the long journey of the Indian semiconductor industry.

“India had begun work in semiconductors way back in 1987. We had the first fab, but unfortunately, after the SCL (Semi-Conductor Laboratory) fire, somehow, we didn’t do anything very well in the sector,” he recounted.

Veerappan explained how India pivoted toward IT services in the 1990s, and chip manufacturing took a back seat. “Then we started importing semiconductor chips and so on. Suddenly, in 2022, India woke up,” he said. That year marked the launch of the India Semiconductor Mission, a ₹76,000 crore initiative aimed at boosting chip design, fabrication, and assembly. 

The momentum has been accelerating since.

“We’ve seen a big change over the past three years. Until now, we were nowhere in semiconductors. Now, we’re going to have the first India commercial wafer coming out in 2027 from the Tata fab in Dholera, Gujarat. That’s a dream come true for the Indian semiconductor industry.”

India is also catching up on the backend of chip manufacturing, known as OSAT (Outsourced Semiconductor Assembly and Testing). “We were nowhere. Now, thanks to the India Semiconductor Initiative, we have four OSATs announced, out of which three are coming up in Sanand, and one in Odisha.”

The first large-scale production from Micron’s OSAT facility in Gujarat’s Sanand is expected later this year.

No ‘India Chip’ Yet

India already plays a crucial role in global chip design. “India does 30% of global semiconductor design,” he said. However, Veerappan was candid about the country’s limitations, too. “When it comes to products, we still don’t have a flagship India chip.”

Though academic institutions have designed some chips, none have been commercialized at scale. “We need to ensure these chips are commercialized. And we must encourage more companies in India to design and own the IP, so we can call it an Indian chip.”

The government has taken a step in that direction with the launch of the DLI (Design Linked Incentive) scheme. “Until now, we never had anything like a design incentive from the government to promote Indian companies designing their own chips. That has now started.”

A more comprehensive design policy is also expected soon. 

Veerappan predicted that L&T will come out with the first Indian chip, possibly within the next 18 months. 

The Market is Ready

The opportunity is massive. “We are currently at $30 billion in semiconductor consumption in the country. The India Electronics and Semiconductor Association (IESA) has projected this figure to grow to $100 billion by 2030,” he said. 

More importantly, Veerappan sees an alignment like never before. “We hadn’t given enough focus to semiconductors earlier. Now, we see the right focus from the central and state governments. That’s a huge shift.”

With the design ecosystem strengthening, manufacturing picking up pace, and policy frameworks aligning with industry goals, India’s semiconductor ambitions are becoming a tangible reality. 

Semiconductor and the World

In the US, the CHIPS Act of 2022 allocated $52.7 billion toward manufacturing, R&D, and workforce development, plus $24 billion in tax credits to incentivize domestic chip production. It also established the National Semiconductor Technology Center (NSTC) to lead advanced research and offered major manufacturing incentives to encourage fabrication plant construction. 

The results are visible, with massive semiconductor facilities rising in Arizona, Texas, and Ohio.

Europe is playing catch-up through the EU Chips Act, enacted in September 2023, with €43 billion in combined public and private investments planned by 2030. The EU’s ambition is to double its global market share from 10% to at least 20% by the end of the decade. TSMC, Intel, and other giants have announced their fab plans for Europe, although most are still in the early stages.

Taiwan, home to the Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker and a key supplier to tech giants like Apple and NVIDIA, continues to dominate the industry. TSMC’s advanced manufacturing capabilities are the benchmark for processors.

China, meanwhile, has been in a long-haul push since launching Made in China 2025, its blueprint for tech self-reliance. The country aims to raise domestic chip production from 40% in 2020 to 70% in 2025, reducing dependency on foreign suppliers.

South Korea continues to punch above its weight, holding a 13.2% share of the $545 billion global semiconductor market in 2023. Samsung, a key player, is making bold moves. Industry reports suggest its investment in the Taylor, Texas, plant could exceed $50 billion. Plans also include reviving a $7.7 billion packaging facility in the US, driven partly by its $16.5 billion chip deal with Tesla. Analysts say this could make Samsung the second-largest chipmaker in the US, after TSMC.