Can India emerge as the next global semiconductor hub after Taiwan?

Over 90% of the world’s most advanced semiconductors are produced in Taiwan, an island caught in the ongoing strategic rivalry between Washington and Beijing.

Any interruption to Taiwan’s chip output would likely ripple across the global economy, as modern semiconductors power everything from smartphones and electric vehicles (EVs) to aircraft and defense systems.

The COVID-19 pandemic exposed this vulnerability when chip shortages forced carmakers to suspend production, highlighting the world’s heavy reliance on a small cluster of manufacturers in East Asia.

Since then, countries have been racing to strengthen semiconductor supply chains. The United States, Japan, South Korea and the European Union have each rolled out multi-billion-dollar initiatives to lure chip producers.

India is now making its most determined effort yet to join that network and position itself as the next major electronics manufacturing center.

India's chipmaking ambitions

Last week, New Delhi approved a $13.2 billion (€11.4 billion) semiconductor initiative known as Semicon 2.0. It builds on the $9 billion India Semiconductor Mission (ISM) launched in 2021 and aims to create a full-fledged chip ecosystem — covering design, fabrication, advanced packaging, specialty materials, equipment production and workforce development.

US chipmaker Micron Technology has set up a semiconductor assembly and testing plant in IndiaImage: Jonathan Raa/Sipa USA/picture alliance

Thousands of engineers employed by Nvidia, AMD, Qualcomm and Texas Instruments are already designing some of the world’s most advanced chips at research hubs in Bengaluru, Hyderabad and Noida.

However, experts note that India has fallen behind in large-scale manufacturing — the segment that delivers the greatest economic and strategic benefits.

"India already has the know-how to design complex semiconductor chips," said V Kamakoti, director of the Indian Institute of Technology Madras.

"Engineers working for Indian and multinational firms have successfully developed sophisticated chips," Kamakoti told DW. "The real hurdle lies in manufacturing."

To date, India’s achievements have largely been in chip assembly and testing, rather than in fabricating the chips themselves.

Kamakoti stressed that the next milestone is creating a domestic fabrication base capable of converting design expertise into mass production.

Hopes of a $100 billion market by 2030

US memory chipmaker Micron Technology, along with Indian firms Kaynes Semicon and CG Semi, has begun commercial operations under the initial phase of the semiconductor program.

Electronics and IT Minister Ashwini Vaishnaw said the next phase will aim to localize more stages of the semiconductor value chain.

"It is no longer so difficult to convince global players," ISM CEO Amitesh Kumar Sinha said, noting that 12 fabrication and packaging projects have been approved, with three already operational.

The government is targeting a domestic semiconductor market valued at $100–110 billion by 2030 and hopes to meet up to 75% of India’s electronics demand with chips designed and manufactured locally.

A costly industrial leap

Yet becoming a major semiconductor producer ranks among the most demanding industrial undertakings for any nation.

A cutting-edge fabrication facility can cost upwards of $20 billion and requires stable electricity supplies, enormous volumes of ultra-pure water and a sophisticated supplier ecosystem producing specialized chemicals, silicon wafers and precision machinery.

Kamakoti believes India should first demonstrate its ability to mass-produce mature 28-nanometer (28 nm) chips before venturing into advanced 3 nm processors used in premium smartphones and AI applications.

"28 nm chips can satisfy most of India’s current needs. Once we master that, we can progressively shift to more advanced nodes," he explained.

Riding the AI boom

India’s plans are also benefiting from broader global trends.

Amid geopolitical friction and the rapid expansion of artificial intelligence, companies are reassessing supply chains, while semiconductor demand is projected to surge in the coming years.

Sambit Sahu, a veteran of more than 30 years in the semiconductor sector at Qualcomm and Intel, argues that India must strengthen capabilities across the entire value chain — from chip design and IP to fabrication and manufacturing.

"The explosive growth of AI will fuel semiconductor demand for years, opening a significant opportunity for India," Sahu told DW.

"Establishing a semiconductor manufacturing ecosystem will be costly and technologically complex, but with consistent investment and policy support, India could become a key production hub within the next decade."

Still, some observers doubt that India can quickly close the manufacturing gap.

A senior industry executive, speaking on condition of anonymity, said India is likely to remain more competitive in chip design than fabrication in the near term.

"India has world-class chip design capabilities, but manufacturing is a different ballgame," he noted. "In the short run, the strongest prospects lie in packaging, testing and mature-node production."

Semicon 2.0 represents India’s boldest step so far in the global semiconductor race.

Its ultimate success will hinge not just on financial pledges, but on the country’s ability to translate them into operational factories, a skilled workforce and a robust, competitive manufacturing ecosystem.