Can India Become the Next Semiconductor Hub after Taiwan?

The recent launch of India’s $13.2 billion semiconductor program, Semicon 2.0, has sparked excitement in the tech world. With an ambitious goal of developing an entire chip ecosystem – from design and fabrication to advanced packaging – India is positioning itself as a major player in the global semiconductor industry.

Disruptions to Taiwan’s chip industry can have far-reaching consequences for the global economy, crippling industries like automotive and aerospace. The COVID-19 pandemic exposed the fragility of current supply chains, forcing automakers to halt production due to chip shortages. In response, industrial powers like the US, Japan, and South Korea have launched multi-billion-dollar programs to attract chipmakers.

India’s entry into this high-stakes game is not without its challenges. While Indian engineers have a strong track record in chip design, the country lags behind in large-scale manufacturing. V Kamakoti, director of the Indian Institute of Technology, notes that “Indian engineers working for both domestic companies and multinational firms have successfully designed and delivered complex chips. The bigger challenge is manufacturing them.”

A key hurdle India must overcome is building a domestic fabrication ecosystem capable of turning design strengths into large-scale production. Micron Technology, Kaynes Semicon, and CG Semi – Indian semiconductor assembly and packaging companies – have begun commercial production under the first phase of India’s program. However, convincing global companies to invest in India will require more than just promises.

The government’s plan to build a domestic semiconductor market worth between $100 billion and $110 billion by 2030 is ambitious. Meeting up to three-quarters of India’s electronics demand through locally designed and manufactured chips would be a significant achievement. But can India afford the staggering cost of building leading-edge fabrication plants, estimated at over $20 billion each?

Amitesh Kumar Sinha, chief executive of the ISM, remains optimistic about India’s prospects. “Convincing global companies is no longer that difficult,” he said, citing 12 approved fabrication and packaging projects, three of which are already in commercial production. However, some industry executives express caution, warning that India may remain stronger in chip design than fabrication for the foreseeable future.

The AI boom will drive demand for semiconductors sharply over the coming decade – a trend that could work in India’s favor. Sambit Sahu, a semiconductor industry veteran with more than three decades of experience at Qualcomm and Intel, emphasizes that India must build capabilities across the semiconductor value chain from chip design and intellectual property to fabrication and manufacturing.

However, India’s progress has been concentrated in chip packaging and testing rather than manufacturing. Can it overcome its manufacturing gap quickly? The verdict is far from certain.

As Semicon 2.0 marks India’s most ambitious attempt yet to enter the semiconductor race, one thing is clear: the country will have to prove itself capable of more than just designing chips. It must demonstrate a commitment to investing in infrastructure, workforce development, and research and development. The clock is ticking – and the world will be watching as India takes its first tentative steps towards becoming a major player in the global semiconductor industry.