India is in a decisive phase of its semiconductor development journey. Global chip supply chains are being restructured due to export controls, national security considerations, and the concentration of manufacturing in a few East Asian economies. These shifts create meaningful opportunities for India while also exposing structural risks that must be assessed carefully. This analysis presents a precise, source-verified view of India’s semiconductor position, tailored for engineers, strategists and policymakers.
1. Global Supply-Chain Restructuring and India’s Position
1.1 Concentration risk and diversification
Semiconductor supply chains remain heavily concentrated in Taiwan, South Korea and China. Deloitte identifies this concentration as a critical vulnerability, highlighted during the COVID-19 disruptions when global production struggled to keep pace with demand [1]. Figure 1 illustrates the high concentration of global semiconductor revenue among a small group of countries, reinforcing the geopolitical and supply-chain risks highlighted in this section.
Figure 1: Global Semiconductor Sales by Country (2021, in billions)
Source: Semiconductor Industry Association (SIA), CSIS, 2022 .
This concentration has accelerated diversification efforts by governments and industry leaders seeking risk-reduced manufacturing locations. India benefits from this shift as a large, politically aligned, and demographically stable market that can support the expansion of advanced packaging, assembly, and selective manufacturing [2].
1.2 Strategic technology partnerships
The United States and India have deepened cooperation under the Initiative on Critical and Emerging Technology (iCET), covering joint semiconductor development, workforce training and collaborative research [3][4]. Japan and India have also formalised technology and supply-chain partnerships, as documented by the Ministry of External Affairs [5].
These strategic partnerships provide India with access to training, tools, process expertise and long-term collaboration with established semiconductor leaders.
2. Domestic Drivers Strengthening India’s Semiconductor Outlook
2.1 Demand growth in electronics and mobility
India’s chip requirements are increasing due to growth in consumer electronics, electric vehicles, telecom networks, data centres, defence systems, and industrial automation. A government publication from the Press Information Bureau states that India’s semiconductor market is projected to reach between $100 billion and $110 billion by 2030 [6].
Figure 2 illustrates the government-reported growth trajectory of India’s semiconductor market, highlighting a sharp rise in demand toward 2030 and reinforcing the scale of downstream opportunities driving domestic chip requirements.
Figure 2: India’s Semiconductor Market Growth Projection (2023–2030) [6].
Figure 3 provides an industry-sourced projection illustrating that India’s semiconductor market is expected to expand at a compound annual growth rate of 23.1%. This aligns with PIB’s market outlook and highlights the rapid increase in chip demand across networking, consumer electronics, automotive systems and power applications.
Figure 3: India’s semiconductor market forecast (2023–2032), showing a projected CAGR of 23.1% across major application segments. (Source: UnivDatos )
2.2 Strong design and verification ecosystem
India has one of the world’s largest pools of semiconductor design and verification engineers. According to an official release from the Ministry of Electronics and Information Technology, India is home to nearly 20% of the world’s chip design engineers, with leading global semiconductor companies operating major design and R&D centres across the country [7].
Government initiatives such as the Chip to Startup programme aim to further strengthen this base by training new VLSI, verification, and R&D specialists.
2.3 Government programmes and industrial investments
India has introduced several national programmes to accelerate the development of its semiconductor ecosystem. The Semicon India initiative, with an approved outlay of 76,000 crore rupees, provides structured fiscal and policy support for fabrication, ATMP, compound semiconductors and display technologies [8]. The programme includes four dedicated schemes offering up to 50% fiscal support for semiconductor fabs, display fabs, compound semiconductor units and ATMP or OSAT facilities. The Design Linked Incentive scheme further supports domestic design houses through product-design and deployment-linked incentives. The Government has also approved the modernisation of the Semiconductor Laboratory in Mohali as part of efforts to strengthen India’s fabrication capability.
These initiatives, combined with multiple semiconductor units recently approved across states, demonstrate India’s intent to build a complete end-to-end semiconductor ecosystem.
3. Opportunities Emerging from Global Realignments
3.1 Trusted location for diversified supply chains
As the global semiconductor ecosystem reassesses its reliance on a handful of East Asian manufacturing hubs, multinational companies are increasingly seeking politically stable, strategically aligned destinations for diversification. India’s consistent diplomatic positioning, strong alignment with major economies, and emphasis on supply-chain resilience position it favourably as corporations balance manufacturing footprints across multiple geographies. India’s large domestic market further strengthens its appeal, offering companies both operational stability and downstream demand that reduces overexposure to single-region dependencies.
In addition, India’s participation in several strategic technology partnerships has enhanced confidence among international stakeholders evaluating alternative supply-chain nodes. Its growing engagement in trusted-technology initiatives, combined with an improving regulatory and investment environment, positions the country as a credible component of global semiconductor resilience strategies. For companies looking to mitigate geopolitical and operational risks, India provides a complementary location that supports long-term continuity in packaging, assembly and selective manufacturing.
3.2 Strong potential in ATMP and OSAT
Assembly, Testing, Marking and Packaging (ATMP) and Outsourced Semiconductor Assembly and Test (OSAT) activities require significantly lower capital expenditure compared with leading-edge fabrication, allowing India to scale capacity more rapidly while building critical manufacturing know-how. The Micron ATMP project in Gujarat is a prominent example of this trajectory, demonstrating how global semiconductor companies can integrate India into their supply-chain architecture. Supported by national incentive programmes, such investments help transfer advanced packaging expertise to India and enable domestic suppliers, workforce groups and technical institutions to align with industry requirements [8][9].
ATMP and OSAT facilities also provide an important intermediate step towards broader manufacturing ambitions. As global companies prioritise distributed packaging to reduce single-point vulnerabilities, India’s growing ATMP capacity positions it as a reliable location for high-value, labour-intensive and precision-driven functions. The resulting ecosystem, spanning materials, equipment servicing, contamination control and logistics, creates a foundation for progressively more complex semiconductor manufacturing operations over the medium term.
3.3 Expanding workforce capability
India’s existing strength in semiconductor design and verification provides a substantial base for developing advanced manufacturing talent. Government-backed programmes now focus on equipping engineers and technicians with skills in equipment handling, process engineering, lithography support, fault-analysis workflows and cleanroom operations. These skill-development efforts directly complement the capabilities required for operating ATMP and semiconductor units approved across various states, helping bridge the gap between design excellence and hands-on manufacturing proficiency [9].
Figure 4 highlights India’s unmatched STEM talent pipeline, validating the country’s capacity to supply engineers and technicians at scale. This workforce depth strengthens India’s ability to support new semiconductor fabs, ATMP units and verification centres with sustained operational capability.
Figure 4: India’s STEM talent pipeline compared globally (Source: Nasscom/IBEF ).
As companies consider shifting portions of their packaging and back-end operations to India, the availability of a scalable, technically trained workforce becomes a key differentiator. Skill programmes linked to national semiconductor initiatives are designed to align training curricula with industry needs, reducing the lag between workforce preparation and operational readiness. These initiatives ensure that India not only hosts semiconductor facilities but also maintains a talent ecosystem capable of supporting long-term operational continuity and expansion.
3.4 Demand alignment with domestic manufacturing
India’s rising demand for electronics, automotive systems, telecom equipment and industrial technologies provides a strong economic rationale for increasing domestic semiconductor production. A government publication notes that India’s semiconductor market is expected to reach between 100 and 110 billion US dollars by 2030, which creates a significant opportunity for manufacturers evaluating long-term investments [6]. The growth of consumer and industrial markets supports stable utilisation of semiconductor facilities and reduces the risks associated with dependence on foreign demand.
The alignment of domestic demand with manufacturing development also reinforces India’s value within the global semiconductor ecosystem. Local production of chips and advanced packaging can reduce import dependence and improve delivery timelines for high-growth sectors. For international companies, this combination of strong market potential and expanding production capacity creates a compelling case for including India in distributed manufacturing and supply chain strategies.
4. Structural Risks and Constraints
4.1 High capital requirements
Semiconductor fabrication requires exceptionally high capital investment. Advanced manufacturing facilities depend on specialised lithography tools, controlled cleanroom environments, and complex process infrastructure, resulting in multibillion-dollar expenditures for a single fabrication unit. These costs create a significant barrier to entry for countries or companies still building foundational capabilities in front-end manufacturing.
For India, the scale of investment required for advanced nodes means that strong international partnerships and carefully designed incentive structures are essential for attracting global players. High initial capital requirements also underscore the importance of ecosystem readiness, as delays in equipment access, utilities, or supply-chain integration can extend payback periods and heighten financial risk for new projects.
4.2 Technology access challenges
India faces constraints in accessing advanced semiconductor process technologies because leading capabilities remain concentrated in Taiwan, South Korea and the United States, which have spent decades developing intellectual property, specialised talent and complex supplier ecosystems required for leading-edge lithography and high-yield manufacturing [1][2]. India depends on long-term technology partnerships, such as the Initiative on Critical and Emerging Technology, to gain exposure to tools, training, and process expertise. Still, progress must keep pace with global node transitions. Without sustained capability development, India risks being limited to mature-node manufacturing, ATMP and design-centric roles while established countries continue advancing into newer technology generations.
4.3 Heavy dependence on imports
India continues to rely on imports for the majority of its semiconductor requirements, including integrated circuits, speciality components, and advanced materials. Analysis from the SSRN research paper shows that India imports between 85% and 90% of its semiconductors, including essential components for smartphones, automotive systems, industrial electronics and telecom infrastructure [10]. This level of dependence exposes the company to global supply chain disruptions, export control restrictions, and geopolitical tensions. It also constrains domestic manufacturers, who remain vulnerable to fluctuations in pricing, inventory cycles and foreign policy decisions.
A comparison of projected demand and potential domestic supply illustrates the scale of this structural gap.
Figure 5 below shows that while India’s semiconductor demand is expected to rise significantly toward 2030, the country’s domestic supply potential expands only marginally over the same period. The widening gap visualises the challenge India faces in reducing import dependence and underscores the strategic urgency behind national programmes aimed at building fabrication, advanced packaging and upstream supply-chain capacity.
Figure 5: India’s Semiconductor Demand vs Potential Domestic Supply (2020–2030) [10].
Bridging this gap will require coordinated investments in front-end manufacturing, ATMP units, speciality chemicals, gases, photomask production and equipment servicing. While India’s current policy initiatives provide a structured foundation, meaningful progress will depend on sustained execution and strong participation from both domestic and international industry partners.
4.4 Infrastructure readiness
Semiconductor fabrication requires infrastructure that meets exceptionally high standards, including uninterrupted power supply, ultra-pure water, advanced chemical-handling systems and precision logistics. Several regions in India are still upgrading their capabilities to meet these requirements consistently, and variability in utilities or environmental controls can delay fab readiness or reduce operational efficiency [10]. Government-backed industrial corridors and proposed semiconductor manufacturing zones are designed to address these gaps. Still, India’s long-term competitiveness will depend on its ability to deliver contamination-controlled, reliable and world-class infrastructure that supports advanced process technologies.
4.5 Workforce shortages in fabrication
India has a strong base of semiconductor design and verification engineers, but fabrication-specific expertise remains limited. Advanced manufacturing requires highly specialised skills in lithography operations, diffusion, etching, process monitoring, yield engineering, and contamination control, which are developed only through years of hands-on experience in mature fabs. Although national programmes are expanding semiconductor-focused training capacity, scaling talent for high-volume fabs and ATMP operations is a long process. SEMI reports that the semiconductor sector will face a global shortfall of over one million skilled workers by 2030, with more than 200,000 engineers required in Asia-Pacific and over 100,000 in Europe [11].
4.6 Geopolitical complexity
India’s semiconductor ambitions intersect with a competitive geopolitical landscape. Partnerships with the United States and Japan strengthen access to tools, research collaboration and workforce development. At the same time, India continues to balance its broader strategic and economic interests within the Indo-Pacific region [5]. Export-control rules, technology-transfer restrictions and shifting diplomatic alignments can influence India’s ability to secure critical manufacturing equipment and materials. Managing these competing relationships requires careful strategic balancing and sustained diplomatic engagement to ensure continued access to global technology ecosystems while supporting India’s long-term semiconductor objectives.
5. Implications for Engineering, Verification and Strategy
5.1 Distributed design and verification
India’s strong base of semiconductor design and verification engineers enables organisations to develop distributed global engineering workflows that reduce development risk and improve throughput. Access to large teams skilled in RTL development, functional verification, formal methods, and physical design allows companies to parallelise work across geographies and maintain continuity during supply-chain or operational disruptions in other regions. This distributed model also supports faster iteration cycles, better utilisation of EDA tools and deeper talent redundancy, which are increasingly crucial as design complexity and verification workloads continue to rise.
5.2 Secondary manufacturing and packaging site
India’s growing Assembly, Testing, Marking and Packaging (ATMP) and Outsourced Semiconductor Assembly and Test (OSAT) capabilities provide multinational companies with a resilient secondary manufacturing and packaging base. Figure 6 highlights where ATMP and OSAT operations sit within the global semiconductor supply chain, reinforcing why India’s expanding capabilities in these stages make it a strong candidate for secondary manufacturing and risk-diversified packaging sites.
Figure 6: ATMP and OSAT roles within the semiconductor supply chain, illustrating how India can support secondary manufacturing, testing and advanced packaging operations. Source: Einnosys (2024 ).
As global supply chains diversify away from over-concentrated fabrication hubs, India offers a location where advanced packaging, assembly and testing can be integrated into a broader risk-mitigation strategy. For engineering and operations teams, this creates an opportunity to establish parallel product lines, introduce redundancy in assembly flows and position India as a complementary site for midstream manufacturing. Strengthening these capabilities also builds the foundation for future transitions into more advanced manufacturing and heterogeneous integration.
5.3 Alignment of technology and policy
Engineering and verification plans increasingly require alignment with policy frameworks because export-control rules, supply-chain constraints and equipment availability directly influence node selection, vendor partnerships and long-term product strategy. Organisations must consider which process technologies and EDA tools are accessible within regulatory limits, assess the impact of geopolitical shifts on tool procurement and ensure compliance with government policies when defining design flows. Incorporating these considerations early in planning reduces programme risk and helps companies optimise product roadmaps, manufacturing partnerships and verification infrastructure in line with evolving semiconductor policy environments.
Conclusion
India’s semiconductor progress is underpinned by rising domestic demand, a large and technically skilled design workforce, targeted national programmes and expanding international partnerships. At the same time, significant challenges remain in infrastructure readiness, front-end fabrication capability, access to advanced tooling and the management of geopolitical complexities. India is increasingly positioned to become a reliable and valuable component of the global semiconductor supply chain through its strengths in design, verification and advanced packaging. Organisations that incorporate India into their long-term design, verification and supply-chain strategies will be better placed to enhance resilience and competitiveness as global semiconductor realignments evolve.
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