Semiconductor War: Where Does India Stand Now?

The Global Chip Race

In 2025, semiconductors have firmly established themselves as the foundation of the global digital economy. From smartphones and electric vehicles to defence systems and AI technologies, microchips are integral to every facet of modern innovation. As geopolitical tensions intensify, especially between the United States and China, semiconductors have become a symbol of strategic power and national security. The world is witnessing a “chip war,” where countries are racing not only to secure chip supplies but to control the means of their production, design, and innovation. In this global realignment, India is stepping up with a bold ambition: to become a credible and self-reliant semiconductor powerhouse.

India’s current semiconductor demand stands at approximately USD 52 billion (2024), projected to cross USD 103 billion by 2030, driven by rapid digitization, increased electronics manufacturing, and rising domestic consumption in sectors like automotive, telecom, and consumer electronics. However, nearly 85% of this demand is currently met through imports, mostly from Taiwan, China, South Korea, and the U.S., highlighting a deep vulnerability in India’s tech supply chain. Global semiconductor shortages during the COVID-19 pandemic and the Russia-Ukraine war exposed India’s dependence on imports, pushing policymakers to accelerate efforts toward establishing a domestic semiconductor ecosystem.

To address this gap, the Government of India launched the India Semiconductor Mission (ISM) under the Ministry of Electronics and Information Technology (MeitY), with a $10 billion (INR 76,000 crore) incentive scheme. The program aims to develop end-to-end semiconductor manufacturing and design infrastructure in India, from fabs and OSAT (Outsourced Semiconductor Assembly and Test) units to chip design centres. This initiative is supported by state-level semiconductor policies, such as those in Gujarat, Uttar Pradesh, and Tamil Nadu, which offer capital subsidies, land allocation, and plug-and-play infrastructure to global investors.

India has already secured strategic investments under this mission. Tata Electronics is setting up a $10.4 billion fabrication facility in Dholera, Gujarat, in partnership with Taiwan’s Power-chip Semiconductor. U.S.-based Micron Technology is establishing a $2.75 billion assembly and testing plant in Sanand, and Foxconn has teamed up with HCL for a display chip unit in Greater Noida. In addition, talks are underway with global players like Tower Semiconductor, AMD, Lam Research, and Renesas, reflecting growing international confidence in India’s policy direction.

India’s chip ambition is also intertwined with global geopolitics. As the U.S. and its allies attempt to reduce dependence on China and Taiwan, India is increasingly being viewed as a strategic partner in creating an alternative, resilient supply chain in the Indo-Pacific region. Through frameworks like the US-India Initiative on Critical and Emerging Technologies (iCET) and Quad Semiconductor Supply Chain Initiatives, India is leveraging diplomatic and trade alliances to gain access to cutting-edge semiconductor tech and R&D.

India's Semiconductor Ambitions

India’s semiconductor industry is rapidly emerging as a strategic pillar in the country’s quest for technological self-reliance and economic transformation. Valued at approximately USD 52 billion in 2024, the Indian semiconductor market is on a steep growth trajectory and is expected to more than double, reaching USD 103.4 billion by 2030, according to industry analysts. This surge is being driven by rising demand in sectors such as smartphones, laptops, electric vehicles, consumer electronics, 5G infrastructure, and the growing adoption of Internet of Things (IoT) devices. However, despite this optimistic outlook, a significant challenge persists—India imports nearly 85% of its semiconductor requirements, heavily relying on countries like Taiwan, South Korea, China, and the United States for both raw chips and finished electronic components.

This import dependency became glaringly visible during the COVID-19 pandemic and the subsequent geopolitical shifts, which disrupted global semiconductor supply chains. The shortage impacted critical sectors in India such as automobile manufacturing and electronics, prompting an urgent call for building a resilient, domestic semiconductor ecosystem. Recognizing the strategic and economic risks of continued reliance on external sources, the Indian government launched an ambitious policy initiative: the India Semiconductor Mission (ISM).

The ISM is a comprehensive roadmap designed to position India as a global hub for semiconductor manufacturing, design, and innovation. Backed by a USD 10 billion (INR 76,000 crore) incentive package, the mission focuses on creating the infrastructure, talent pool, and policy environment needed to attract global semiconductor manufacturers and encourage domestic capabilities. The incentives are being offered under a structured framework that includes Production Linked Incentive (PLI) schemes, support for display fabrication units, design-linked incentives for chip design startups, and capital assistance for building semiconductor fabs and ATMP (Assembly, Testing, Marking and Packaging) units.

One of the key elements of the ISM is its emphasis on public-private collaboration. The Indian government is actively seeking partnerships with global semiconductor giants to bring in technological expertise, best practices, and critical investments. This includes collaboration with companies like Tata Electronics, Micron Technology, Foxconn, and Tower Semiconductor, among others. These companies are setting up large-scale semiconductor fabrication and testing facilities in India, with projects underway in Gujarat, Uttar Pradesh, and Maharashtra. For instance, Tata’s USD 10.4 billion fab in Dholera, being built in partnership with Taiwan's Powerchip Semiconductor, is expected to produce 50,000 wafers per month for sectors like automotive and computing. Meanwhile, Micron’s facility in Sanand is set to become operational by 2025, boosting India's backend processing capabilities.

Key Developments and Investments

1. Tata Electronics' Strategic Moves

Tata Electronics is at the forefront of India's semiconductor endeavours. The company is investing over INR 910 billion (approximately USD 10.44 billion) to establish a semiconductor fabrication plant in Dholera, Gujarat, in collaboration with Taiwan's Power chip Semiconductor Manufacturing Corporation. This facility aims to produce 28nm chips, catering to sectors like automotive, computing, and AI.

Additionally, Tata is setting up an Outsourced Semiconductor Assembly and Test (OSAT) facility in Jagiroad, Assam, with an investment of INR 27,000 crore (around USD 3.6 billion). This plant is expected to generate over 25,000 jobs and bolster India's capabilities in semiconductor assembly and testing.

2. HCL-Foxconn Joint Venture

The Indian government has approved a new semiconductor unit by the HCL-Foxconn joint venture, involving an investment of INR 3,706 crore. Located near the upcoming Noida International Airport in Uttar Pradesh, this facility will focus on semiconductor assembly and testing, contributing to the region's industrial development.

3. Micron Technology's Investment

Micron Technology is establishing a semiconductor assembly and test facility in Sanand, Gujarat, with full operations expected by the end of 2025. This project is part of a broader investment push in the state, totalling INR 15,000 crore, aimed at building a comprehensive semiconductor value chain.

4. Lam Research's Commitment

U.S.-based Lam Research plans to invest over USD 1 billion in India's Karnataka state to enhance the semiconductor ecosystem. This investment aligns with India's efforts to expand its semiconductor industry and is expected to boost the country's manufacturing capabilities.

Regional Initiatives and Policies

Gujarat: Building a Semiconductor Hub

Gujarat has emerged as a focal point for semiconductor investments. The state government launched the 'Gujarat Semiconductor Policy 2022-2027,' offering significant support to the sector, including an additional 40% subsidy for capital expenditure. The Dholera Special Investment Region (SIR) is being developed as a plug-and-play destination for the semiconductor industry, with infrastructure projects like water supply, schools, and hospitals underway.

Uttar Pradesh: Attracting Major Players

In a major boost to India’s semiconductor ambitions, Uttar Pradesh has launched the Uttar Pradesh Semiconductor Policy 2024 to create a favorable ecosystem for chip manufacturing and allied industries. The policy aims to attract investments in semiconductor fabrication, display manufacturing, ATMP (Assembly, Testing, Marking, and Packaging), and electronic component production, offering incentives for capital investment, land subsidies, and faster approvals. This policy aligns with India’s broader objective of establishing itself as a semiconductor manufacturing hub under the India Semiconductor Mission.

The Yamuna Expressway Industrial Development Authority (YEIDA) region, located near Noida and Greater Noida, has emerged as a key investment hotspot under this initiative. The area is witnessing rapid industrial development, with infrastructure tailored to support high-tech manufacturing. As of 2025, the region has received investment commitments totaling INR 12,000 crore (approx. USD 1.45 billion) from semiconductor and electronics manufacturing firms.

Among the most prominent investments is the HCL-Foxconn joint venture, which is setting up a semiconductor unit in YEIDA’s Sector 10. The facility is projected to manufacture 36 million display driver chips per month and will focus on backend chip processes. According to YEIDA officials, the unit is expected to generate direct employment for around 2,000 individuals, making it a significant contributor to both economic and job growth in the region. (TOI, April 2025)

In addition, YEIDA has allotted land to nine other electronics firms, which include players in PCB assembly, LED chip manufacturing, and semiconductor support services. These companies are contributing to the formation of an integrated ecosystem that complements larger fabrication and testing units.

To facilitate this growth, the state government is investing in world-class infrastructure, including dedicated power grids, clean water supplies, and high-speed connectivity across the YEIDA industrial belt. Plans are also underway to set up a semiconductor R&D center and skilling institute in collaboration with top Indian and international universities to ensure the availability of a trained workforce.

With strategic location advantages proximity to Delhi NCR, access to expressways, and upcoming connectivity to the Jewar International Airport, YEIDA is well-positioned to become North India’s semiconductor and electronics manufacturing hub. Uttar Pradesh’s proactive approach, policy incentives, and infrastructure readiness mark a significant step toward realizing India’s goal of becoming a global semiconductor destination.

Challenges Ahead

While India's semiconductor journey shows promise, several challenges persist:

• Infrastructure and Supply Chain: Establishing a robust semiconductor ecosystem requires significant infrastructure development, including reliable power supply, water resources, and transportation networks.
• Skilled Workforce: The semiconductor industry demands a highly skilled workforce. India aims to expand its semiconductor talent pool to 1.2 million by 2032, with initiatives like the 'Chip to Startup' program targeting the training of 85,000 engineers in VLSI and embedded systems.
• Technological Gaps: India currently lacks expertise in advanced semiconductor manufacturing technologies, such as sub-10nm chip fabrication. Bridging this gap will require substantial R&D investments and international collaborations.

International Collaborations

India is actively engaging in international collaborations to bolster its semiconductor capabilities. The United States–India Initiative on Critical and Emerging Technology (iCET) is a collaborative framework established to enhance cooperation in developing fields of technology, including semiconductors. Such partnerships are vital for technology transfer, research, and development in the semiconductor sector.

India's Position in the Semiconductor War

India’s strategic push into the semiconductor domain signals a turning point in the nation's industrial and technological landscape. At a time when semiconductors have become the heartbeat of the global digital economy, powering everything from smartphones and AI to defense systems and critical infrastructure, India’s ambitions to reduce import dependence and emerge as a global chip-making hub are both timely and imperative. The government’s deliberate policy direction, backed by sizable fiscal commitments, is gradually laying the foundation for a self-sustaining semiconductor ecosystem.

The launch of the India Semiconductor Mission (ISM), supported by a $10 billion incentive package, is a landmark step aimed at developing domestic capabilities across the value chain from design to fabrication and testing. What sets India’s approach apart is the holistic nature of its strategy, combining financial incentives with infrastructure development, talent creation, and international partnerships. Key projects such as the Tata-Powerchip $10.4 billion fab in Gujarat, Micron’s backend facility in Sanand, and the HCL-Foxconn chip unit in Uttar Pradesh underscore the seriousness of India's intent and its growing attractiveness to global players.

International collaborations, particularly through initiatives like the U.S.-India Initiative on Critical and Emerging Technology (iCET) and strategic ties with nations like Taiwan, Israel, and Japan, are further strengthening India’s positioning. These partnerships are essential not just for capital and machinery but also for gaining access to advanced technology and process know-how, especially in nodes below 28nm where India currently lacks expertise.

Moreover, India is leveraging its existing strengths in software and electronics system design to create a globally competitive chip design ecosystem. With over 20% of the world’s semiconductor design engineers based in India, the country is already a back-end design powerhouse. The next step building physical fabrication capacity requires persistent effort but is no longer beyond reach. Investments in programs like ‘Chips to Startup’ and the establishment of semiconductor R&D hubs will play a key role in bridging the skills gap and ensuring a steady talent pipeline for the industry.

Challenges do remain. Fabrication plants require high precision, consistent electricity and water supply, and cleanroom environments. Creating this infrastructure across India’s vast geography is not easy. Additionally, competing with established giants like Taiwan’s TSMC, South Korea’s Samsung, and the U.S.'s Intel will require not only capital but a long-term commitment to innovation and quality. However, India is not aiming to replace these giants overnight but to position itself as a reliable alternative in the global value chain especially for nations seeking supply chain diversification in the wake of U.S.-China trade tensions.

The semiconductor race is not merely a technological contest; it is a geopolitical and economic one. By stepping up its game, India is asserting itself as a critical player in the global south and as a strategic ally to the West. As the world moves toward an era of AI, 5G, autonomous systems, and quantum computing, control over semiconductors will shape the contours of global power.

In this emerging era, India is no longer watching from the sidelines. With the right mix of policy, partnerships, and perseverance, the country is on a clear path to becoming a formidable force in the global semiconductor war. The seeds have been planted, the harvest, though some years away, promises to be transformative.