18 - 09 - 2026

India’s Semiconductor Moment Moves From Ambition to Execution

For years, India’s semiconductor story was largely told in the future tense.

There were policy announcements, investment proposals, fabrication plans and foundation-stone ceremonies. There were agreements to sign, pilot lines to establish and test chips to develop. The ambition was substantial, but the physical evidence of a domestic semiconductor ecosystem remained limited.

At the fifth edition of Semicon India, Prime Minister Narendra Modi sought to signal a change in that narrative, arguing that India had moved beyond policy discussions and project announcements and was entering an era of commercial semiconductor production.

“This year, we are talking about commercial production,” Modi said at the event, which brought together Union ministers, industry leaders, technology executives, researchers, universities, startups and semiconductor professionals.

The shift is significant because semiconductor manufacturing is rarely about a factory alone. A functioning ecosystem requires chip designers, equipment suppliers, materials companies, packaging and testing facilities, research institutions, specialised engineers, reliable power and customers capable of absorbing the output.

India’s next challenge, therefore, is not simply to build semiconductor plants. It is to build the industrial ecosystem around them.

From Vishwakarma to silicon

The event coincided with Vishwakarma Jayanti, allowing Modi to draw a connection between India’s long tradition of craftsmanship and the extreme precision demanded by modern semiconductor manufacturing.

The contrast is striking. Semiconductor fabrication requires some of the most sophisticated manufacturing processes in the world, involving enormous capital expenditure, specialised materials and highly integrated global supply chains.

Modi linked this industrial transition to the government’s broader objectives of Aatmanirbhar Bharat and Viksit Bharat, presenting semiconductor capability as part of India’s effort to strengthen its technological and manufacturing base.

He also used the evolution of Semicon India itself to illustrate the progression of the country’s semiconductor programme: from policy discussions in 2022, to projects and agreements, then pilot lines and test chips, and now commercial production.

“India has moved from policy to projects, from projects to pilot lines and test chips, and now to commercial production,” Modi said in describing that progression.

He congratulated semiconductor facilities in Mohali and Surat as they entered commercial operations, while cautioning that building technological capability in semiconductors is a long-term undertaking.

“Building technological capability in this sector takes decades,” Modi said, pointing to established semiconductor ecosystems that were built through sustained investment and industrial development.

India’s stated objective is consequently broader than establishing individual fabs. It is to develop the capabilities that allow a semiconductor industry to become self-sustaining.

The second page of India’s semiconductor story

Modi described the next stage as the “second page” of India’s semiconductor mission.

According to the government’s presentation at the event, the first phase involved an investment scale of roughly $8 billion, while the second phase could reach approximately $13.5 billion.

The focus is also widening. Alongside conventional semiconductor manufacturing, India wants to encourage fabless companies, domestic intellectual-property creation and partnerships between international companies and Indian startups and design firms.

The sectors being highlighted include compound semiconductors, silicon photonics and infrastructure for artificial intelligence.

Behind these technologies sits an even larger industrial ecosystem involving semiconductor equipment, specialty chemicals, industrial gases and advanced materials.

“For the ecosystem to grow, all its parts must grow together,” Modi said, urging companies across the semiconductor supply chain to participate in India’s expanding market.

Twelve semiconductor projects have received approval so far, according to Modi, with further projects expected as the programme enters its next phase.

The government is also seeking to develop a stronger demand pipeline for domestically manufactured chips. That demand will be critical because semiconductor manufacturing requires enormous upfront investment and depends on predictable customers, specialised suppliers, skilled workers and reliable infrastructure.

A fabrication plant cannot operate as an isolated industrial project. It needs an ecosystem around it.

The football field of engineers

If fabs and capital represent the visible infrastructure of the semiconductor push, talent is its human infrastructure.

India’s large engineering population has repeatedly been presented as one of the country’s principal advantages. Modi referred to an observation by an American technology executive that recruiting engineers in the United States might fill a room, while doing the same in India could require a football field.

The metaphor captures both the scale of India’s engineering workforce and the challenge now confronting the country: converting that scale into specialised semiconductor expertise.

The government has set a target of training 100,000 engineering students for the semiconductor industry. More than 70,000 have already received training, Modi said.

Before his address, Modi interacted with students working on chip design and received semiconductor chips designed by them—an attempt to put a tangible face on India’s emerging talent pipeline.

But the real test will be whether training numbers translate into expertise across chip architecture, process engineering, verification, advanced packaging, equipment engineering and materials science.

Semiconductor ecosystems require engineers capable not merely of operating existing technologies, but of solving increasingly complex problems at the edge of the industry.

Modi also called on researchers working in India to contribute to advanced technology development and invited Indian researchers overseas to connect with domestic programmes.

Industry, he said, should play a greater role in research and development within India, creating opportunities for companies while strengthening the country’s technical workforce.

AI changes semiconductor equation

Artificial intelligence is also changing the nature of semiconductor demand.

The traditional semiconductor race has revolved around producing smaller, faster and more energy-efficient transistors. That competition continues, but AI is increasingly shifting attention from individual chips to entire computing systems.

Modi said the global semiconductor market had grown by more than 20% over the previous two years, with AI emerging as a major driver of demand.

Modern AI infrastructure requires processors, high-bandwidth memory, advanced packaging, interconnects, cooling and power systems to function as a single high-performance architecture.

“The challenge is not only what is inside the chip, but also what is happening around it,” Modi said.

That means India’s opportunity extends beyond wafer fabrication. Advanced packaging, chip-to-chip interconnects, memory technologies and power-efficient computing could become increasingly important as AI systems scale.

The relationship between semiconductors and AI is also creating a new infrastructure challenge. Thousands of high-performance processors operating in AI data centres require enormous quantities of electricity and generate substantial heat.

As a result, the future competitiveness of the semiconductor industry will increasingly depend on the availability of energy and the infrastructure required to deliver and manage it.

Power behind the chip

For a semiconductor fabrication facility, electricity is not simply another operating expense. Manufacturing processes require stable and continuous power, while disruptions can have significant consequences for highly sensitive production environments.

For AI data centres, the power challenge is even more pronounced.

Modi highlighted India’s expansion in renewable energy and broader power infrastructure as an advantage for the semiconductor and AI industries. Installed solar capacity, he said, had increased from approximately 2 GW to more than 160 GW over the past decade.

He also pointed to developments in nuclear energy, including the opening of the sector to private participation and work on small modular reactors.

“Power infrastructure is a major strength for India’s semiconductor ecosystem,” Modi said.

The broader implication is that semiconductor competitiveness will depend on more than subsidies and industrial parks. The reliability, cost and composition of the electricity powering fabs, packaging facilities and data centres will increasingly form part of the technology equation itself.

From semiconductor security to geopolitical trust

The final dimension of India’s semiconductor strategy is geopolitical.

Semiconductors underpin modern communications, defence systems, automobiles, industrial equipment and artificial intelligence. Yet global chip manufacturing remains concentrated in a relatively small number of locations, leaving supply chains vulnerable to geopolitical tensions, trade restrictions and disruptions.

Modi described the weaponisation of supply chains as an emerging concern and positioned India’s semiconductor ambitions within this changing global environment.

The argument is not simply that India wants to manufacture more chips. It wants to become a trusted node in a strategically important global supply chain.

Modi cited a range of developments—from India’s financial-technology ecosystem and digital infrastructure to transport, energy and broader economic indicators—as evidence of the country’s growing connectivity and institutional capacity.

“When supply chains are being weaponised, the importance of India’s development increases significantly,” Modi said.

That is perhaps the larger significance of India’s semiconductor push.

The immediate objective is to establish fabs, assembly and testing facilities and design capabilities. The longer-term objective is to create an ecosystem capable of designing, manufacturing, packaging and deploying increasingly sophisticated semiconductor technologies while remaining integrated with global supply chains.

The journey, however, remains at an early stage. Commercial production is a milestone, but it is not the same as having a mature semiconductor ecosystem. That will require years of investment, technological learning, supplier development, talent creation and sustained demand.

What has changed is the language of the mission.

India is no longer speaking only about the chips it hopes to manufacture. It is increasingly talking about the engineers designing them, the customers buying them, the energy powering the factories and the global supply chains in which those chips will ultimately operate.

The next chapter of India’s semiconductor story will therefore be measured not by announcements alone, but by whether the country can turn its emerging manufacturing capacity into a durable, globally connected technology ecosystem.

By Subramanya Joshi

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