Accelerating India’s Semiconductor Ambition: Building the Capabilities, Ecosystem and Leadership to Compete Globally
India’s semiconductor ambitions are entering a more important phase. The country is moving from announcing incentives and attracting individual projects toward building the wider capabilities needed to participate across the global chip value chain.
That shift is visible at SEMICON India 2026, being held in New Delhi from September 17 to 19 under the theme “Silicon to Systems: Building the Ecosystem.” The event brings together more than 600 exhibitors, around 300 international companies and delegations from more than 40 countries.
The objective is bigger than setting up semiconductor factories. India wants to develop expertise in chip design, fabrication, advanced packaging, equipment, materials, research and talent while integrating Indian companies into global supply chains.
That makes the semiconductor push both an industrial opportunity and a long-term technology strategy.
India’s Semiconductor Strategy Is Moving Beyond Chip Manufacturing
India launched the Semicon India Programme in 2021 with a financial outlay of ₹76,000 crore. Its objective was to establish a semiconductor and display manufacturing ecosystem rather than relying exclusively on imported chips.
By 2026, the programme had moved into a more tangible phase.
The government says 12 semiconductor projects have been approved across six states, representing investment commitments of more than ₹1.64 lakh crore. These projects cover silicon and compound semiconductor fabs, display-related manufacturing and advanced packaging facilities. Three facilities — involving Micron, Kaynes Semicon and CG Power — have already commenced commercial production, according to government data.
This progression matters because semiconductor manufacturing requires much more than a fabrication plant. Suppliers of chemicals, gases, equipment, packaging materials, testing services, logistics and engineering capabilities must develop around the facility.
In other words, one fab can become the anchor for an entire industrial cluster.
Semicon 2.0 Raises the Ambition
In July 2026, the Union Cabinet approved Semicon 2.0 with a total budget outlay of ₹1,27,500 crore.
The programme is structured around six pillars:
Chip design
Semiconductor equipment and materials
Fabrication facilities
Advanced packaging
Research and development
Talent development
The change in emphasis is significant. India is no longer focusing only on attracting manufacturing projects. It is attempting to build the capabilities that make a semiconductor ecosystem sustainable over the long term.
The government has also identified equipment and materials, full-stack design, Indian semiconductor intellectual property and supply-chain resilience as important areas for the next phase.
For investors and businesses, this broadens the potential opportunity beyond companies directly operating chip fabs.
India Already Has an Advantage in Chip Design
Manufacturing is the most visible part of the semiconductor industry, but India enters the race with an established strength in engineering and chip design.
Government data estimates that India employs nearly 20% of the global semiconductor chip-design workforce and hosts about 7% of the world's semiconductor-related Global Capability Centres. Indian engineers are involved in chip design, verification and development for advanced technologies.
This provides an important starting point.
The challenge now is to capture more value from that expertise inside India. Designing a chip for an international company and owning semiconductor intellectual property are not necessarily the same thing.
That is why the next stage of India's semiconductor strategy places greater emphasis on domestic IP, startups, design platforms and research.
Government-backed design programmes have already produced measurable activity. By April 2026, 75 institutions had taped out 211 chips, while seven chips had been successfully fabricated at different nodes, including a 12-nanometre process, according to government data.
Building the Missing Middle: Equipment, Materials and Packaging
A semiconductor supply chain is often compared with an iceberg: the chip itself is only the visible portion.
Behind it sits a network of equipment manufacturers, specialty-chemical suppliers, industrial-gas companies, clean-room specialists, testing firms, packaging providers and logistics operators.
India's new policy direction explicitly targets these areas.
Advanced packaging is particularly important because semiconductor value increasingly depends on how multiple chips are integrated into a single package. This becomes even more relevant for AI, high-performance computing and advanced electronics.
The development of domestic packaging and testing capacity can therefore provide India with a route into higher-value semiconductor manufacturing while the country develops deeper fabrication capabilities.
The government has said its approved projects span ATMP and OSAT facilities — industry terms for assembly, testing and packaging operations — alongside fabrication projects.
Global Partnerships Are Central to the Strategy
India cannot build a globally competitive semiconductor industry in isolation.
The technology, equipment and expertise required are distributed across countries and companies. India is therefore seeking partnerships with semiconductor companies and governments across the global ecosystem.
SEMICON India 2026 includes participation from companies such as ASML, Applied Materials, Lam Research, Tokyo Electron, Micron, Infineon, AMD, Tata Electronics, CG Power and Advantest, among others.
The government has also highlighted technology and ecosystem partnerships with the United States, Japan, Singapore, the Netherlands, Germany and the European Union.
These relationships can help India access technology, customers, manufacturing expertise and global supply chains.
However, partnerships alone do not create competitiveness. India will ultimately need domestic companies capable of meeting international standards on cost, quality, reliability and delivery.
AI Is Changing the Semiconductor Opportunity
Artificial intelligence is adding another layer to India's semiconductor ambition.
AI systems require powerful processors, high-bandwidth memory, networking hardware and increasingly sophisticated computing infrastructure. As AI adoption expands, semiconductor demand is becoming increasingly linked with data centres and high-performance computing.
The government estimates that the global semiconductor market was around $796 billion in 2025 and could exceed $2 trillion by 2030. It estimates India's semiconductor demand at around $50 billion currently, potentially reaching approximately $103 billion by 2030. These are government projections rather than guaranteed outcomes.
This potential market growth creates an opportunity for India to develop capabilities not only for domestic consumption but also for exports.
The combination of semiconductors, electronics manufacturing and AI infrastructure could eventually form a connected industrial ecosystem.
What India Must Do to Compete Globally
The difficult part begins after investment announcements.
Semiconductor projects require substantial capital, specialised talent, reliable electricity and water, advanced equipment, strict process control and long customer-qualification cycles.
India therefore needs to focus on several areas simultaneously.
1. Build specialised talent
A large engineering workforce is useful, but semiconductor manufacturing requires specialised knowledge in process engineering, materials science, equipment maintenance, chip architecture, verification, packaging and testing.
2. Develop domestic suppliers
A resilient ecosystem needs Indian companies supplying chemicals, gases, equipment components, packaging materials and engineering services.
3. Strengthen research and intellectual property
Long-term competitiveness will depend on Indian companies and research institutions developing proprietary technologies rather than remaining primarily manufacturing partners.
4. Improve execution
Approved investment is not the same as completed capacity. Investors should watch construction progress, commercial production, utilisation rates, customer contracts and eventual profitability.
5. Integrate with global supply chains
India's goal should not simply be self-sufficiency. Semiconductor manufacturing is inherently global, so competitiveness will depend on India's ability to become a reliable supplier to international customers.
What It Means for Investors
India's semiconductor opportunity extends beyond pure-play chip manufacturers.
Companies involved in electronics manufacturing, semiconductor packaging, industrial equipment, specialty chemicals, engineering, power electronics, data centres and technology design could potentially benefit as the ecosystem expands.
But the investment case differs from company to company.
A company announcing a semiconductor project may take years before the project contributes materially to revenue. Capital expenditure can be large, technology partnerships can change, and semiconductor cycles can affect demand and pricing.
Investors should therefore monitor actual project execution, capacity utilisation, customer relationships, margins, cash flows and returns on invested capital rather than relying only on the size of announced investments.
The Next Test Is Execution
India has already crossed an important line: semiconductor manufacturing is no longer only a policy ambition. Commercial production has begun at multiple facilities, while a larger pipeline of projects is under development.
The next challenge is to turn these individual projects into a connected ecosystem.
That means developing Indian suppliers around fabs, creating globally competitive semiconductor IP, producing specialised talent and helping domestic companies move from contract manufacturing toward technology ownership.
The opportunity is significant, but so is the complexity.
Bottom Line
India's semiconductor ambition is evolving from “building chip factories” to building an entire semiconductor ecosystem.
The ₹1,27,500 crore Semicon 2.0 programme, more than ₹1.64 lakh crore of approved project commitments, growing design capabilities and increasing participation from global technology companies show the scale of the effort.
The real measure of success, however, will be what happens beyond the headlines: whether India can develop competitive manufacturing, domestic technology, reliable suppliers, skilled talent and globally accepted semiconductor products.
For investors, the semiconductor story should therefore be viewed as a long-term ecosystem theme rather than a single-stock opportunity. The next milestones to watch are commercial production, customer wins, capacity expansion, domestic value addition and the emergence of Indian semiconductor technology companies.
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This article is for informational and educational purposes only and should not be considered investment advice.