India’s Semiconductor Strategy Takes Off with Six New Fabs

India has taken a transformative step in its journey toward becoming a global semiconductor manufacturing hub. In 2025, the Indian government announced the approval and initiation of six new semiconductor fabrication units, marking a major stride under the India Semiconductor Mission (ISM). Supported by a $10 billion incentive program, this initiative is aimed at minimizing import reliance, strengthening technological independence, and responding to the increasingly volatile global chip supply chain.

Union Minister for Electronics and IT, Ashwini Vaishnaw, highlighted this move as India’s strategic answer to global supply chain disruptions and geopolitical strains, especially those involving the U.S. and China. This push could redefine India’s role in the global semiconductor ecosystem, ensuring resilience and competitiveness in high-tech industries.

The Semiconductor Imperative

Semiconductors form the foundation of modern electronic infrastructure, powering everything from mobile phones to defense systems and artificial intelligence. As of 2023, the global chip market was valued at $600 billion and is forecast to surpass $1 trillion by 2030, driven by rising demand in AI, 5G, and connected devices.

Despite being home to a strong semiconductor design workforce—around 20% of global integrated circuit designers—India has historically lacked chip fabrication capabilities. Earlier efforts, including a 2007 proposal, fell short due to the high capital expenditure and a weak industrial ecosystem.

The Semicon India Program, launched in 2021, reignited these ambitions by offering generous incentives for chip fabs, ATMP (Assembly, Testing, Marking, and Packaging), and OSAT (Outsourced Semiconductor Assembly and Test) facilities. The approval of six new facilities in 2025 signifies that India’s efforts are finally gaining momentum.

Overview of the Six Approved Fabs

India’s semiconductor expansion is geographically diversified, with Gujarat emerging as a core center. Below are the six approved projects:

1. Tata-Powerchip (Dholera, Gujarat):
   A joint venture with Taiwan’s Powerchip, this will be India’s first advanced semiconductor plant, producing 28nm–110nm chips for applications in AI, telecom, automotive, and computing. With a projected investment of ₹91,526 crore (~$11 billion), it will manufacture 50,000 wafers monthly and begin production by late 2026.

2. Micron Technology (Sanand, Gujarat):
   The U.S.-based firm is developing an ATMP/OSAT facility for DRAM and NAND packaging with an investment of $2.75 billion. Approved in 2023, the facility is expected to start production in 2025 and generate 20,000 jobs directly and indirectly.

3. Tata Semiconductor ATMP (Morigaon, Assam):
   Focused on high-volume chip packaging for sectors such as EVs and telecom, this facility will handle 48 million chips daily. Backed by ₹27,120 crore (~$3.25 billion), it is slated for mid-2025 operations and aims to create 27,000 jobs.

4. CG Power–Renesas–Stars Microelectronics (Sanand, Gujarat):
   This collaboration brings together Indian, Japanese, and Thai companies to develop an OSAT plant with a $900 million investment, further integrating India into the global semiconductor packaging and testing supply chain.

5. Kaynes Technology (Sanand, Gujarat):
   Though its financials remain undisclosed, this OSAT facility was approved in 2024 and is geared toward supporting India’s consumer electronics and telecom manufacturing surge.

6. HCL–Foxconn (Jewar, Uttar Pradesh):
   This joint venture, approved in May 2025, focuses on producing display driver chips. With an investment of ₹3,706 crore (~$440 million), the plant is scheduled to begin output by 2027, adding geographic variety to India’s chip manufacturing footprint.

Altogether, these six facilities, backed by an estimated ₹1.5 lakh crore (~$20 billion), are expected to produce about 70 million chips daily.

Why This Matters Strategically

India’s semiconductor plans are driven by several national priorities:

• Lowering Imports: Currently, India imports nearly all its semiconductors, a market valued at $45 billion in 2023 and projected to double by 2030. Domestic fabs will reduce dependence on foreign suppliers, especially amid growing concerns about China and Taiwan.

• Geopolitical Leverage: With tensions rising in the Taiwan Strait and global efforts to diversify chip production, India is positioning itself as a trusted alternative. Through initiatives like the Quad’s chip supply chain framework, India is strengthening partnerships with the U.S., Japan, and Australia.

• Job Creation and Economic Boost: The approved fabs are projected to generate 80,000 jobs, both directly and indirectly. The semiconductor ecosystem is expected to uplift ancillary industries and support India’s already growing electronics manufacturing sector.

• National Security: Chips are essential for defense technology, communications, and infrastructure. Local production will reduce strategic vulnerability and enhance technological autonomy.

• Global Market Share: Targeting legacy nodes (28nm–90nm), which still constitute 60% of global chip demand, India aims to secure a 10% share of the semiconductor market by 2030.

Government Support and Infrastructure

The India Semiconductor Mission underpins this initiative with extensive policy and financial backing:

• Incentives: The central government covers up to 50% of capital costs, while states like Gujarat offer an additional 20%. This significantly lowers entry barriers for investors.

• Infrastructure: Semiconductor parks like the one in Dholera feature top-tier logistics, reliable power, and ultra-clean water. Gujarat’s Semiconductor Policy 2022–27 further eases operations with streamlined approvals and subsidized utilities.

• Skilled Workforce: Programs such as Chips-to-Startup (C2S) and the Skill India Semiconductor initiative aim to train over 100,000 engineers by 2025, addressing the estimated demand for 500,000 professionals by 2030.

• Global Collaborations: Partnerships with global players—Taiwan’s PSMC, the U.S.’s Micron, Japan’s Renesas, and Thailand’s Stars Microelectronics—facilitate technology transfer, talent exchange, and capability building.

• Additional Schemes: Initiatives like the Production-Linked Incentive (PLI) and SPECS (for promoting electronic component manufacturing) are designed to foster domestic demand for chips.

Challenges to Overcome

Despite significant progress, India faces substantial hurdles:

• High Costs: Semiconductor fabs require investments ranging from $4–10 billion, with long gestation periods. Smaller firms may find it difficult to survive without extensive support.

• Talent Shortage: Building and operating fabs demand skilled professionals. Although training programs are in place, global competition for talent makes retention a challenge.

• Incomplete Supply Chain: India lacks domestic capacity for key inputs like ultra-pure chemicals and advanced lithography tools, making it dependent on imports that could delay timelines.

• Competition Abroad: China, Taiwan, and South Korea are far ahead, especially in producing cutting-edge chips. India’s initial focus on mature nodes could limit high-end market access.

• Geopolitical Risks: Diplomatic balance is crucial to navigate technology partnerships while avoiding conflicts over export controls and sanctions.

Impact and Future Outlook

The semiconductor initiative holds varying implications:

• For Industry: Major players like Tata, Micron, and Foxconn gain access to a massive and growing domestic market. However, smaller companies may require more tailored support.

• For Consumers: In the long term, local production could reduce costs of electronics and telecom equipment. However, prices may initially remain high due to imported machinery and components.

• For the Government: Delivering on this initiative will enhance India’s global image and economic resilience. Failure could weaken investor confidence and disrupt policy momentum.

• For Global Supply Chains: India’s participation will contribute to the diversification of global chip manufacturing, especially relevant as Western countries seek alternatives to China and Taiwan.

Conclusion

India’s approval of six semiconductor fabrication plants in 2025 represents a foundational shift in its tech and manufacturing trajectory. Armed with robust incentives, strategic partnerships, and a growing talent pipeline, the country is laying the groundwork to emerge as a serious player in the global chip arena. While challenges remain in infrastructure, workforce readiness, and competition, the government’s proactive stance offers a strong base for long-term success. If executed well, this initiative could redefine India’s digital economy and solidify its role in the global semiconductor value chain.