When Nanie Torres moved from the Philippines to Sanand in India’s western state of Gujarat nearly two years ago, he brought with him more than three decades of semiconductor manufacturing experience. His arrival marked a pivotal moment for India’s burgeoning semiconductor industry, signaling a concerted effort to bridge critical gaps in its manufacturing capabilities and accelerate its entry into the complex global chip supply chain. Torres, now the General Manager of Operations at Kaynes Semiconductor, is instrumental in overseeing one of India’s first commercial chip-packaging plants, a facility that commenced production in March. This plant is responsible for the crucial back-end processes where semiconductor chips are assembled, tested, and prepared for integration into a vast array of electronic devices. Kaynes Semiconductor stands at the forefront of a significant wave of new semiconductor projects emerging across India. These initiatives are a direct response to the Indian government’s ambitious drive to establish a robust domestic chip manufacturing industry and elevate its strategic role within the intricate global semiconductor ecosystem. This "semiconductor push," initiated in 2021, is underpinned by substantial financial commitments and a clear strategic vision, aiming to transform India from a predominantly chip-consuming nation into a key player in chip production and innovation. A Strategic Imperative: India’s Semiconductor Ambition India’s foray into semiconductor manufacturing is driven by a confluence of economic, technological, and geopolitical factors. Semiconductors are the foundational technology powering virtually every modern electronic device, from smartphones and automobiles to sophisticated telecommunications networks and critical defense systems. The global semiconductor market, valued at over US$500 billion and projected to grow significantly, represents immense economic opportunity. For India, currently importing the vast majority of its semiconductor needs (estimated at 2.3 trillion rupees in 2024, according to NITI Aayog), developing indigenous manufacturing capabilities is not merely an industrial aspiration but a strategic imperative for national security and economic sovereignty. The government’s commitment is evident in the approval of 12 manufacturing projects since 2021, representing planned investments exceeding 1.64 trillion rupees (approximately US$17 billion). While five of these projects have already entered commercial production, the remaining seven are in various stages of construction or ramp-up. This rapid progression underscores the urgency and strategic importance placed on this sector by Prime Minister Narendra Modi’s administration. At the recent Semicon India 2026 conference in New Delhi, industry experts highlighted India’s long-standing strength in chip design, a deep pool of skilled engineers cultivated over decades. However, they also candidly acknowledged the significant gap in large-scale semiconductor manufacturing and packaging experience, a legacy of historical underinvestment in this capital-intensive sector. Bridging the Experience Gap: Global Talent and Accelerated Learning To overcome this experience deficit, companies like Kaynes Semiconductor are adopting pragmatic strategies. Raghu Panicker, CEO of Kaynes Semiconductor, explained their approach: recruiting seasoned industry veterans from established manufacturing hubs like the Philippines and Malaysia. These experts, who have "done it before," are tasked with mentoring and building a highly capable Indian team around them. This strategy aims to accelerate the learning curve, bypassing decades of incremental development. "We don’t have to repeat the 30 years it took others to get here. We can bring in people who have done it before, learn from the existing ecosystem and jump ahead," Panicker told CNA, emphasizing the potential for rapid advancement by leveraging global knowledge. The initial focus of India’s commercial production facilities has largely been on the back-end stages of chipmaking, specifically Assembly, Testing, Marking, and Packaging (ATMP). These operations are less capital-intensive and technologically complex than front-end wafer fabrication, making them a strategic entry point into the semiconductor value chain. Currently, facilities operated by Micron, Kaynes Semiconductor, and CG Semi in Sanand, along with Suchi Semicon in Surat, Gujarat, and CDIL Semiconductor in Mohali, Punjab, are concentrating on these critical packaging processes. These steps are crucial for transforming raw semiconductor dies into functional chips ready for integration into electronic devices. While the ATMP sector is gaining momentum, India’s ambitions extend to front-end manufacturing. The nation’s first wafer fabrication plant, the foundational stage where circuits are built on thin slices of semiconductor material, is now anticipated to commence commercial operations in mid-2028, a slight delay from its initial target of end-2026. This highlights the immense technical and logistical challenges inherent in establishing advanced manufacturing facilities. Building a Comprehensive Ecosystem: Beyond the Fab The true challenge, as industry experts at Semicon India 2026 underscored, lies in developing a comprehensive supply chain around these manufacturing plants. "Our worry is how we grow the local ecosystem," Panicker remarked. "How do we manufacture more of the materials, components and equipment we need here in India?" A complete semiconductor ecosystem requires a vast network of suppliers for specialized materials, chemicals, industrial gases, precision components, and sophisticated manufacturing equipment, alongside a highly skilled workforce. Recognizing this, the Indian government approved "Semicon 2.0," a 1.27 trillion-rupee program in July, signaling a strategic shift. Electronics and IT Minister Ashwini Vaishnaw articulated this broader vision: "The objective… is not limited to establishing individual semiconductor manufacturing facilities, but to build a complete ecosystem around them." This holistic approach acknowledges that a truly resilient and competitive semiconductor industry cannot rely solely on importing every ancillary input. However, building this ecosystem does not necessarily equate to localizing every single part of the highly specialized semiconductor supply chain. The complexity is immense. Diganta Sarma, Head of Strategy and Business Development at Indian industrial gas supplier Inox Air Products, illustrated this with the example of a single fabrication plant requiring approximately 50 different gases to process silicon wafers into chips. While Inox currently produces about a dozen of these gases in India and aims to add ten more, Sarma acknowledged that many others would still need to be sourced from established overseas producers due to the highly specialized technology and expertise required. Nonetheless, increasing demand within India is prompting specialized capabilities to move closer to the market. US chip toolmaker Lam Research, for instance, announced plans to invest over 100 billion rupees in its first Indian plant. This facility will produce specialized silicon parts crucial for semiconductor manufacturing equipment. Peter Holland, Vice President of Global Supply Chain at Lam Research, noted that these components are currently sourced globally from the United States, South Korea, China, and Malaysia, indicating India’s potential to become a new node in this diversified supply network. Diversifying, Not Decoupling: A Global Resilience Strategy The global semiconductor industry has faced unprecedented disruptions in recent years, highlighting the vulnerabilities of concentrated supply chains. Prime Minister Modi, speaking at Semicon India 2026, emphasized the growing importance of "new and reliable manufacturing hubs such as India at a time when supply chains are being weaponized." Recent events, from a July earthquake in Japan disrupting chip production to Chinese export controls on critical semiconductor materials in 2023 and 2024, have underscored the urgent need for diversification. However, industry experts unanimously agree that resilience does not mean severing ties with established semiconductor economies. Instead, it implies a strategic diversification of sources and manufacturing locations. Nivruti Rai, CEO of Invest India and former Intel India head, pointed out that while countries like Japan might have lost ground in certain chip manufacturing segments to nations like South Korea, they remain indispensable suppliers of specialized equipment and materials. "They retained the choke points," Rai explained, highlighting how even global giants like South Korea’s SK Hynix and Taiwan’s TSMC rely heavily on Japanese suppliers. India seeks to tap into this expertise while simultaneously building its own domestic capacity. Collaborations are already taking shape. Tata Electronics, for example, signed agreements at the Semicon India conference with Japanese suppliers including Fujifilm and Sumitomo Chemical for critical semiconductor materials, with an eye on exploring local production in India. Singapore-based semiconductor equipment maker ASMPT maintains sales and service operations in India, even as its core manufacturing remains in established hubs like Singapore and Malaysia. Kenneth Koh, ASMPT’s Marketing Director, stressed that India must attract suppliers across the entire spectrum—raw materials, components, and advanced manufacturing—as its industry grows. "Without the ecosystem, everything else will have to be imported," he warned, noting the adverse impact on manufacturing time and costs. Navigating Geopolitical Tensions and De-risking Geopolitical tensions add another layer of complexity to supply chain decisions. Axiro Semiconductor, an Indian chip designer, reportedly avoids Chinese foundries and packaging facilities for some clients due to concerns about geopolitical exposure. However, Naveen Yanduru, Axiro’s CEO, acknowledged the deep interconnectedness of global supply chains: "Our supply chain is outside of China, but the raw materials that our suppliers depend upon are coming from China." This illustrates the challenge of true decoupling and emphasizes the importance of a nuanced de-risking strategy. Ajit Manocha, President and CEO of SEMI, a global semiconductor industry association, clarified the concept of de-risking: "To me, de-risking only means creating redundancy in the system." He explained that having alternative suppliers and manufacturing locations is crucial to prevent a disruption in one country from halting global production. This approach focuses on building resilience through diversification rather than complete isolation. From Buyer to Global Supplier: India’s Long-Term Vision Ultimately, for India to build a truly resilient semiconductor industry, it must evolve beyond being merely a consumer and become a significant supplier to the global chip industry. Ashok Chandak, President of the India Electronics and Semiconductor Association (IESA) and SEMI India, advocates for a forward-looking strategy. "China Plus One is an old phrase," Chandak stated, referring to the common corporate strategy of diversifying production outside China. Instead, he proposes an "India Plus Many" approach – a vision where India not only designs and manufactures more semiconductors domestically but also actively supplies customers across multiple countries, becoming a critical and reliable node in the global supply chain. Kaynes Semiconductor is already exploring this path, engaging with overseas equipment makers to integrate into their global supply chains. Panicker envisions a phased approach: "We can start by manufacturing spare parts in India and supplying them overseas. Then we can move from making the spares to assembling the equipment, and eventually manufacturing the complete equipment here." Early indications suggest international interest in this approach. ASETS, a Singapore-based firm that manufactures etching machines (critical for removing microscopic layers from wafers to create chip circuits) and currently assembles them in Singapore, is actively seeking Indian companies to supply parts for its equipment. Ramasamy Chockalingam, ASETS’s Business Development Director, expressed his intent: "I’m trying to get the fundamental parts made in India." He identified areas like aluminum machine bodies and relatively simple electronic assemblies as immediate opportunities for Indian suppliers. However, he also noted that highly specialized work, such as the precision finishing required for semiconductor cleanroom equipment, is not yet readily available in India. Industry executives acknowledge that India does not need to produce every single component of a semiconductor to achieve its goals. Instead, the country could strategically focus on areas with relatively lower barriers to entry compared to building advanced wafer fabs, such as advanced packaging and specialized semiconductor materials. Ajit Manocha of SEMI reiterated this point: the key is to identify specific niches within the semiconductor ecosystem where India can build sufficient capability to become indispensable. "There you become indispensable, and that creates leverage for you," he concluded. India’s journey to establish itself as a formidable force in the global semiconductor landscape is undoubtedly complex and long-term. However, with strategic government support, significant investments, a pragmatic approach to leveraging global expertise, and a clear vision for building a comprehensive ecosystem, India is making tangible strides towards transforming its aspirations into a tangible reality, poised to play a crucial role in shaping the future of global technology supply chains. Post navigation Britain’s Competition Appeal Tribunal Greenlights Landmark Consumer Lawsuit Against Apple and Amazon Over Alleged Anti-Competitive Practices. Construction Begins on Singapore’s Fourth Egg Farm, Targeting Half of Local Demand by Full Capacity.
