Why in News?
India’s chip design ecosystem is in the spotlight. By September 2025 the country’s engineers were designing thousands of integrated circuits annually and forming a vital part of the global semiconductor supply chain. The government’s Semicon India programme and a wave of private investment signal ambitions to move beyond design into manufacturing.
Historical Context
Since the 1980s, multinational companies have set up design centres in India to tap into its large pool of engineers. Over time, Indian firms and start‑ups began developing their own chips for telecom, automotive and consumer electronics. However, manufacturing largely remained abroad due to high capital costs and limited fabrication expertise. Recognising the strategic importance of semiconductors, the Government of India launched the ₹76,000‑crore Semicon India mission in 2021, offering subsidies for fabrication plants and design incentives.
Current Status
- Design powerhouse: India accounts for roughly one‑fifth of global semiconductor design engineers. Around 3,000 chips are designed here every year, powering everything from smartphones to automobiles.
- Manufacturing projects: The country’s first major packaging and assembly plant, being built by Micron in Gujarat, is underway. Other proposals for fabrication plants (fabs) are awaiting approvals.
- Talent development: The “Chips to Start‑up” programme aims to train over 80,000 engineers, while universities partner with Electronic Design Automation (EDA) firms to give students hands‑on experience.
- Growing market: India’s domestic demand for chips – driven by smartphones, electric vehicles, solar panels and industrial IoT – is projected to exceed US$ 110 billion by 2030.
Drivers of Growth
- Geopolitical shifts: Companies around the world are seeking alternatives to China, making India an attractive “China+1” destination.
- Policy support: Incentive schemes such as the Production‑Linked Incentive (PLI) for electronics and the Design Linked Incentive (DLI) reduce the cost of setting up factories and encourage R&D.
- Skilled workforce: India produces around eight lakh engineers annually, many with experience in electronics design and software.
- Rising consumption: A booming consumer electronics market and the push for electric mobility create strong domestic demand.
Significance
- Economic multiplier: Each direct job in semiconductor manufacturing creates several indirect jobs in supply chains, design services and downstream industries.
- Reduced import dependence: Building local fabs lessens reliance on foreign suppliers, enhancing economic security.
- Technology leadership: Designing and manufacturing chips fosters innovation in artificial intelligence, defence and telecom.
- Regional development: Proposed semiconductor hubs in Gujarat, Karnataka and Odisha could spur infrastructure and education in those regions.
Challenges
- Capital intensity: Fabrication plants cost billions of dollars and require sustained government support.
- Skill gaps: While India has many engineers, few have hands‑on experience with cutting‑edge fabrication processes.
- Infrastructure: Reliable power, water and clean‑room facilities are essential for chip fabs but remain under‑developed.
- Policy continuity: Long gestation periods mean investors need assurance that incentives will be consistent across political cycles.
Way Forward
- Focus on mature nodes: Instead of jumping directly to the most advanced process nodes, India can first master 28 nm and above, which still power automotive and industrial devices.
- Strengthen R&D: Increase funding for universities and start‑ups working on semiconductor materials, packaging and indigenous design tools.
- Public–private partnerships: Adopt risk‑sharing models where government and industry jointly invest in fabs and share output.
- International collaboration: Deepen ties with leading chip‑making nations such as the United States, Japan and Taiwan to access expertise and markets.
Conclusion: India’s chip ambitions are no longer confined to design services. With the right mix of incentives, skill development and global partnerships, the country can become a key player in the semiconductor value chain and secure its place in the digital economy.