India is gearing up to play a significant role in the global semiconductor landscape as the country accelerates efforts to establish its own manufacturing capabilities. With a burgeoning tech sector and a wealth of engineering talent, the nation aims to reduce its dependency on foreign chip sources and bolster its electronics industry.
The Need for Localised Chip Manufacturing
Arnob Roy, co-founder of Tejas Networks, highlights the critical nature of computer chips in telecommunications. Based in Bangalore, Tejas Networks provides essential equipment for mobile phone and broadband networks, relying on specialised chips tailored for telecom applications.
“Telecom chips are fundamentally different from consumer or smartphone chips,” Roy explains. “They manage enormous data volumes from countless users simultaneously, so reliability is non-negotiable.” The pandemic exposed the fragility of global semiconductor supply chains, leaving many industries struggling when chip availability plummeted. Roy notes, “Covid made it clear that semiconductor manufacturing is too concentrated globally, and that concentration carries serious risk.”
India’s Engineering Prowess
India boasts a remarkable pool of engineering talent, with approximately 20% of the world’s semiconductor engineers residing in the country. Amitesh Kumar Sinha, Joint Secretary of India’s Ministry of Electronics and Information Technology, states, “Almost every major global chip company has either its largest or second-largest design centre in India, working on cutting-edge products.”
While India excels in the design phase of chip production, the manufacturing segment remains an area of growth. Currently, Indian companies like Tejas Networks design chips domestically but rely on overseas facilities for production. The government is now prioritising the development of a self-sufficient semiconductor ecosystem to mitigate risks highlighted during the pandemic.
The Road to Semiconductor Self-Sufficiency
Creating a robust semiconductor industry involves several critical stages. India is already strong in the design phase but faces challenges in wafer fabrication—the process of etching circuits onto silicon wafers. This aspect is predominantly controlled by Taiwanese firms, with China attempting to catch up.
India’s initial focus will be on the Outsourced Semiconductor Assembly and Test (OSAT) phase. Ashok Chandak, president of the India Electronics and Semiconductor Association (IESA), notes, “Assembly, test and packaging are easier to start than fabs, and that is where India is moving first.” Excitingly, several OSAT plants are set to enter mass production this year.
One such pioneer, Kaynes Semicon, launched in 2023, is the first Indian company to establish a semiconductor plant with governmental backing. With a hefty investment of $260 million (£270 million), Kaynes is operational in Gujarat, focusing on assembling and testing chips. CEO Raghu Panicker emphasises the importance of this stage: “Packaging is not just putting a chip in a box. It involves a complex 10 to 12-step manufacturing process.”
Emphasising Strategic Chips
Kaynes Semicon won’t be manufacturing cutting-edge chips for the latest smartphones or AI applications initially. Instead, the focus will be on chips for essential industries like automotive, telecommunications, and defence. “These may not be glamorous chips, but they are economically and strategically vital for India,” Panicker asserts. “Building an industry starts with serving our own market; complexity can come later.”
While the journey has its challenges—such as training a workforce familiar with the rigorous demands of semiconductor manufacturing—both Roy and Panicker are optimistic about the future. Training skilled personnel is a significant hurdle, as Panicker notes, “You cannot shortcut five years of experience into six months. That is the single biggest bottleneck.”
Looking Ahead
As the semiconductor landscape evolves in India, companies like Tejas Networks anticipate a flourishing local manufacturing base. Roy believes that over the next decade, significant advancements in semiconductor production will directly benefit firms like his.
“It’s the beginning of a long journey,” he remarks. “I envision Indian companies ultimately designing and manufacturing complete telecom chipsets, but this will require patient capital and time. Deep-tech products take longer to mature, and India is just beginning to support that kind of investment.”
Why it Matters
The development of a self-sufficient semiconductor industry in India is not just a strategic move but a necessary evolution for the nation’s tech landscape. By reducing reliance on foreign suppliers, India can ensure greater stability and resilience in its electronics sector. This initiative has the potential to foster innovation, create jobs, and position India as a formidable player in the global semiconductor arena, ultimately benefiting industries and consumers alike.
