India’s Growing Role in the Semiconductor Race

As the global demand for semiconductors surges, countries are racing to secure their position in this critical industry. While the U.S., China, Taiwan, and South Korea have traditionally dominated chip manufacturing, India is now emerging as a strategic player in the global semiconductor race.

This blog explores India’s growing investments in semiconductor infrastructure, its potential to become a global hub, and the challenges it must overcome to compete at scale.

The Global Chip Shortage and Strategic Importance

Semiconductors are essential to modern technology—from smartphones and laptops to electric vehicles and defense systems. The COVID-19 pandemic exposed vulnerabilities in the global supply chain, prompting countries to diversify and localize chip production.

Example: The 2021–2022 chip shortage delayed production across industries, costing the automotive sector alone over $200 billion.

Example: The U.S. CHIPS Act allocated $52 billion to strengthen domestic semiconductor manufacturing and reduce dependence on foreign suppliers.

India’s Semiconductor Push

India has launched a series of initiatives to attract investment and build domestic capacity for semiconductor manufacturing and design.

Example: In 2021, the Indian government announced a $10 billion incentive plan under the “Semicon India” program to support chip fabrication, assembly, testing, and R&D.

Example: Vedanta Group and Foxconn signed a joint venture in Gujarat to build a $19.5 billion semiconductor and display manufacturing plant—the largest of its kind in India to date.

Advantages India Brings to the Table

India offers several advantages that position it well for semiconductor growth:

• A large pool of skilled engineers and IT professionals

• Competitive labor costs

• A growing electronics manufacturing ecosystem

• Strategic geopolitical alliances with the U.S., Japan, and Europe

Example: India’s partnerships with countries like Japan and the U.S. have focused on building secure semiconductor supply chains, including technology transfer and capacity building.

The Design Sector: India’s Quiet Strength

While India is still building its fabrication capacity, it already plays a major role in semiconductor design. Many global chipmakers, including Intel, AMD, and Qualcomm, have design and R&D centers in India.

Example: India accounts for 20% of the world’s semiconductor design engineers, contributing significantly to chip architecture and innovation.

Challenges Ahead for India

Lack of Existing InfrastructureIndia currently lacks advanced fabrication facilities (fabs), and building them requires significant time, capital, and technical expertise.

Example: While the Vedanta-Foxconn deal is promising, delays and geopolitical factors could impact execution.

Global CompetitionCountries like Taiwan and South Korea have decades of experience and highly developed infrastructure, making it difficult for new entrants to compete.

Example: TSMC in Taiwan remains the world leader in advanced chips, with unmatched scale and efficiency.

Policy and BureaucracyComplex regulations and slow approval processes can hinder the speed of implementation and discourage foreign investors.

Example: Previous attempts to establish fabs in India have failed due to policy delays and lack of coordination between central and state governments.

The Road Ahead

To succeed in the semiconductor space, India must:

• Accelerate infrastructure development

• Streamline regulations and provide ease of doing business

• Foster public-private partnerships with global leaders

• Invest in education and upskilling to support future innovation

Conclusion: A Rising Power in a Critical Industry

India’s foray into semiconductor manufacturing signals its intent to be more than just the world’s back office—it’s positioning itself as a key player in high-tech industries. While challenges remain, the momentum is building. With strategic investments, skilled talent, and global partnerships, India’s semiconductor ambitions could soon become a cornerstone of its digital future.

By Sunny Wadhwani

March 30th, 2025