RESEARCH ON SEMI CONDUCTOR BUSINESS

Overview:

The semi-conductor industry in India has witnessed a rapid growth due to the great demand of
Artificial Intelligence, Electric Vehicles and the expansion of the use of technology. While India
has quite excelled in establishing a great market for electronic manufacturing and IT services it
has still lagged in the semi-conductor industry due to the absence of adequate domestic chip
manufacturing units. However the recent initiatives made by the government which is the India
Semi-conductor Mission has helped in expanding the semi- conductor industry to make India a
key player in this sector. Through this research I have highlighted on what exactly is a semi-
conductor , its types , key players and key industries in this market and the stance of various
states as well as the India’s stance in the global level with the recent developments made to
uplevel their position globally.

What is a Semi- conductor ?

A semi conductor in general is a material with electrical conductivity that has properties of both
insulator and a conductor. Generally a substance that can conduct electricity is called
a conductor, and a substance that cannot conduct electricity are known as an insulators.
Semiconductors have properties that sit between a conductor as well as an insulator. Semi-
conductors have become an essential part of modern electronics whose usage is primarly seen in
smartphones, digital cameras, televisions, washing machines, refrigerators and LED bulbs etc.
They are essential due to their compactness, reliability, power efficiency. The current global
semiconductor industry is projected to reach approximately $697 billion in 2025, marking an
11% year-over-year increase, which is driven by strong demand in data centers and AI
technologies. Generally used materials in Semiconductors are Silicon (Si) and Germanium (Ge),
which are commonly found in nature, however semiconductors can also be made from sulfur (S),
boron (B), or cadmium (Cd).

Types of Semi- conductors:

There are mainly two types of Semi-conductors:

1. Intrinsic Semi-Conductors
 2. Extrinsic Semi-Conductors

Intrinsic semiconductors are pure in form and composed of only one kind of material. They do
not have any impurities added to them. They are natural materials that can be used directly in the
devices. Eg: Silicon and Germanium are classed as intrinsic semiconductors,as they are
chemically pure, containing nothing but semi-conductive material. Extrinsic semiconductors on
the other hand comprise of multiple intrinsic semiconductors with other substances added to
change their properties and are generally impure in nature. When the intrinsic semiconductors
are transformed, two types of extrinsic semiconductors can appear:

 N-type or donors
 P-type or acceptors

The process of adding impurities to the semi- conductors industries is called doping.The
extrinisic semi-conductors are made through this process.

The various kinds of Industries of Semi- Conductors include :

 Fabs (short for “fabrication”) which are facilities in which semiconductor products are
manufactured.

 Fabless companies focus on designing chips. They partner with other companies
(foundries) for the manufacturing phase.

 Foundries are companies that manufacture semiconductor products as a service. They do

not design chips.

 Integrated device manufacturers (IDMs) design and manufacture their own chips in
their own fabs.

On the basis of functionality semiconductor chips can be divided into four main categories which
are memory chips, microprocessors, standard chips, and complex systems-on-a-chip (SoCs).
When organized by types of integrated circuit (IC’S), the three types of chips are digital, analog,
and mixed.

Memory chips- It stores data and programs on computers and data storage devices.
Eg:Random-access memory (RAM) chips provide temporary workspaces, whereas flash memory
chips hold information permanently unless erased. Read-only memory (ROM) and
programmable read-only memory (PROM) chips.

Microprocessors contain one or more central processing units (CPUs). Computer servers,
personal computers (PCs), tablets, and smartphones may each have multiple CPUs.

Graphics Processing Unit (GPU) is capable of rendering graphics for display on an electronic
device. It is best known for its use in providing the smooth graphics that consumers expect in
modern videos and games.

Commodity integrated circuits (CICs), are simple chips used for performing repetitive processing
routines. Produced in large batches, these chips are generally used in single-purpose appliances
such as barcode scanners.

The SoC (system on a chip) is among the newest type of chip , all of the electronic components
needed for an entire system are built into a single chip. The capabilities of a SoC are more
extensive than those of a microcontroller chip, which generally combines the CPU with RAM,
ROM, and input/output (I/O).

There are also different nodes of semiconductors. Smaller nodes usually mean higher
performance, lower power consumption, and higher density. The most advanced ones—below 7
nanometers (nm)— are the most sought after and most difficult to produce. Advanced
semiconductors are often used for AI, high-performance computing, 5G/6G networks, and other
emerging domains that require large amounts of data processing and computation. 1

Process of semi- conductors manufacturing :

1
Antonio Varas, Raj Varadarajan, Ramiro Palma, Jimmy Goodrich, and Falan Yinug, “Strengthening the Global
Semiconductor Supply Chain in an Uncertain Era,” Boston Consulting Group, April 1, 2021.
It is essential to understand the process of semi- conductors for India’s position and its market
in this sector. The process of creating semiconductors can be broken down into several key steps.

The creation of semiconductor microchips involves a series of highly precise and complex steps.
These steps can be broadly categorized into wafer fabrication and chip packaging & testing, and
the entire process typically takes 24 to 28 weeks. The major stages are as follows:

1. Wafer Preparation -The process begins with a silicon wafer, which serves as the base for the
chip. This wafer is cleaned, polished, and inspected to ensure it is defect-free and ready for
further processing.

2. Patterning (Photolithography)

In this step, a pattern is created on the wafer surface to define the structure of the electronic
components:

 A photoresist (light-sensitive material) is applied.

  A mask with the desired circuit pattern is placed over the wafer.
 Ultraviolet (UV) light exposes the pattern onto the photoresist.
 The exposed areas are developed and removed, revealing a patterned layer.

3. Doping -To control the electrical properties of the silicon, impurities are introduced using ion
implantation. This step enables the formation of p-n junctions, which are critical to
semiconductor function.

4. Deposition -Thin layers of materials (such as metals or oxides) are deposited onto the wafer to
build up the chip’s layers. Common techniques include:

 Chemical Vapor Deposition (CVD)

 Physical Vapor Deposition (PVD)
 Atomic Layer Deposition (ALD)

These layers help form transistors, interconnectors, and insulating layers.

5. Etching -Unwanted material is removed using etching to shape the circuit:

 Wet etching uses chemicals.

 Dry etching or plasma etching uses gases or plasma.

This process defines the fine features of the circuit on the wafer.

6. Packaging and Testing - Once all circuits are built, the wafer goes through:

 Die separation: individual chips (dies) are cut from the wafer.
 Packaging: Each die is mounted on a substrate and connected via wires or solder bumps.
 Testing: each chip is rigorously tested for defects and performance using electrical and
functional tests.

Duration of the entire process:

Wafer fabrication takes approximately 16–18 weeks, involving hundreds of process steps.
Packaging and testing require an additional 8–10 weeks, depending on chip complexity.
Why has this sector become so important ?

Semiconductors underpinned in almost all modern technology from simple clocks to advanced
supersonic aircraft, all of them rely on semiconductors to function . Notably, semiconductors
form the basis of all advanced technologies nowadays from wireless communication, IoT, AI,
quantum computing and clean energy. When it comes to sustainability, semiconductors help
advance methods for harnessing energy from renewable sources and can be found in wind
turbines and solar farms. The constant evolution in semiconductor technology is paving the way
for AI to expand its reach into various fields, increasing its impact on our daily lives. 2 Due to
their high importance specialized factories, called semiconductor fabs have to be established
which again cost millions of dollars and take years to build. The most advanced semiconductor
wafers, which are smaller and faster, can only be produced in three to five factories globally.
Modern research and development efforts rely on access to the high-powered computing enabled
by these advanced chips. A few semi-conductors are of high importance Moreover, cutting-edge
semiconductors are considered “dual-use goods,” meaning they have applications in both civilian
and military products.15 They are key to critical infrastructure, such as energy and
communications and are essential for innovation and advancement in internal and external
security,

India’s semi conductor’s market :

India’s having a huge consumption market of semi- conductors which will significantly grow as
India’s has been significantly contributing to this sectors since major companies in this sector
have their R& D centres here . According to a report from IESA and Counterpoint Research,
India’s semiconductor consumption is expected to reach $64 billion by 2026, tripling in size
from $22 billion in 2019.3 That amount is expected to nearly double again to reach $110 billion
by 2030, at which point analysts anticipate India will account for an approximately 10 percent

2
Syed Alam, Timothy Chu, Michael Kurniawan, Jaya Shukla and Yanamadala Chowdary, “Unleashing the full
potential of AI,” Accenture, November 21, 2022.
3
India Electronics & Semiconductor Association (IESA) and Counterpoint Research, “India Semiconductor Market
Report” (IESA and Counterpoint Research, March 2022); Counterpoint Research, “India’s Promising Semiconductor
Manufacturing Trajectory,” news release, May 9, 2023, https://www.counterpointresearch.com/zh-
hans/insights/india-semiconductor-manufacturing trajectory/.
share of direct global semiconductor consumption. 4 By 2030, analysts predict wireless
communications ($26.5 billion), consumer goods ($26 billion), and automotives ($22 billion)
will be the largest components of India’s semiconductor market. (See figure 1.)

120

11
100
8.2
80 16.1

60 22

40 26
4.4
20 6.6
8.5 26.5
8.5
0
2022 2030
wirless communication consumer
automative electronics computer
wireline communications others

Figure 1: India’s semiconductor market, 2022 (actual) and 2030 forecast ($billions) 5

4
Invest India, “Building Resilient Electronics & Semiconductor Value Chains” (power point presentation, October
4, 2023, New Delhi, India).

5
Invest India, “Building Resilient Electronics & Semiconductor Value Chains” (power point presentation, October
4, 2023, New Delhi, India).
India’s position in various facets of the semi- conuctors industry:

India’s greatest strength is the R&D as wellas the deisgn of the IC’s. It employs approximately
20 percent of the world’s semiconductor design engineers. 6About 3,000 individual ICs are
designed in India each year.7 One of the world’s top-25 semiconductor design companies—
including Intel, Texas Instruments, NVIDIA, and Qualcom have design and R&D centers in
India. Much of this presence is centered in the Bangalore which is in the state of Karnataka. It is
also the hub for the semi- conductor manufacturing equipment design. A U.S. manufacturing
company Lam Research Corporation which manufactures equipment for thin film deposition,
plasma etch, photoresist strip, and wafer cleaning processes of semi- conductors has launched
Lam Research lab in India through which several employment opportunities where created in
the labs. It has proposed a $25 million investment to set up a new lab in the state of
Karnataka.8 In June 2023, Another company named Applied Materials which is a semiconductor
toolmaker has announced plans to invest $400 million over four years to launch a new
engineering center in India, which will support more than $2 billion of planned investments and
create over 500 new advanced engineering jobs. 9

The problem that arises is that in this sector of the process is that India services foreign multi
nationals for the design work and lacks its own local design ecosystem for semi- conductors
There are really less amount of startups taking up the lead for the design work , Mindgrove
Technologies, a Chennai-based systems-on-a-chip (SoC) developer specializes in designing 28
nm chips for connected devices such as automobiles, medical devices, wearables, smart
10
electricity and water meters, and home appliances. Other notable Indian design start-ups
include Saankhya Labs and Signalchip , Saankhya Labs being India’s first fabless semiconductor

6
Nidhi Singal, “Is India a ‘semiconductor design’ nation? All you need to know,” Business Today, September 6,
2022, https://www.businesstoday.in/technology/story/is-india-a-semiconductor-design nation-all-you-need-to-know-
346508-2022-09-06.
7
India Electronic and Semiconductors Association (IESA), “Semiconductor Manufacturing Value Chain: India’s
Opportunity in the Global Market” (IESA, April 2022).
8
Peerzada Abrar, “LAM Research plans to set up a semiconductor lab in Karnataka,” Business Standard, October 6,
2023, https://www.business-standard.com/industry/news/us-based-lam research-plans-to-set-up-a-
semiconductor-lab-in-karnataka-123100600938_1.html
9
“Applied Materials to invest $400 million in India for new engineering center,” Reuters, June 22, 2023,
https://www.reuters.com/technology/applied-materials-invest-400-million-india-new engineering-center-2023-06-
22/
10
Mindgrove Technologies, “About Us,” https://www.mindgrovetech.in/about-us.
solutions company and developer of the world’s first production software-defined radios
chipsets.11 Similarly, Signalchip is a fabless design company developing innovative chips to
enable high-speed wireless communication standards such as 4G-LTE/3G WCDMA and 5G-
NR.12 The only way India could grow and establish as a key player in this industry is by
establishing semi- conductor manufacturing capabilities ( foundries) as most of the Indian chip
designers have to send abroad for further development and testing due to the lack of
manufacturing hubs. Another problem faced by the Startup companies is in getting investment ,
venture capitalists refrain from investing in semi- conductor industry because it demands
consistent funding with a long time before the returns start materializing,” as long as 8 to 10
years. In 2022, VC investment in India declined by 38 percent to $20.9 billion, down from $33.8
billion.

Semi – conductors Assembly test and Packaging

Assembly Test and Packaging ( ATP) generally occurs through one of two business models:

1) In-house ATP services which are performed by integrated device managers and foundries
after fabrication, or

2) by outsourced assembly and test (OSAT) firms, which perform ATP activities for third-party
customers.13 Asia accounts for 81 percent of total global ATP activity, with China alone
accounting for 38 percent of global ATP activity, and Taiwan about 37 percent.14 India currently
does not have a ATP plant but it is coming up with 2 OSAT facilities in Assam and gujrat

11
Saankhya Labs, “About Us,” https://saankhyalabs.com/aboutus/.
12
Singalchip, “Welcome to Singalchip,” https://www.signalchip.com/
13
Khan, Mann, and Peterson, “The Semiconductor Supply Chain,” 24.
14
Chris Miller and David Talbot, “Mexico’s Microchip Advantage,” Foreign Affairs, August 28, 2023,
https://www.foreignaffairs.com/mexico/mexicos-microchip-advantage-semiconductor-china.
After passing of the recent Semicon programme by the central government in the year 2021
which had 4 schemes , India has received a few investments for establishing fabrication facility.
Till date there hasn’t been any fabrication facility and manufacturing all of which was
outsourced from foreign companies. After decades India has ventured into establishing its own
Fab facility in Dholera Gujarat.

Key international players in the semi- conductor industry:

International countries have already been moving fast forward with having several Semi-
conductors manufacturing plants already been established.With respect to the design phase, U.S
and Europe have been leading with companies like Qualcomm, Nvidia, and ARM, renowned for
their cutting-edge chip architectures and intellectual property (IP). However, when it comes to
fabrication and assembly/testing/packaging (ATP), the spotlight shifts to Asia, where countries
like Taiwan, South Korea, China, and Japan dominate the landscape. 12These nations have
invested heavily in building state-of-the-art fabrication facilities and developing a robust supply
chain ecosystem, making them indispensable players in the global semiconductor industry.15

15
Semiconductor Manufacturing: The Industry's Biggest Players
 80%

70%
ADVANCED PROCESSES
60% MARKET SHARE 2023

50% ADVANCED PREDICTED

PROCESSES MARKET SHARE
40% 2027
MATURED PROCEESES MARKET
30% SHARE2023

20% MATURED PREDICTED MARKET

SHARE 2027
10%

0%
JAPAN US CHINA TAIWAN

Taiwan:

Taiwan is home to the world’s largest foundry (63.8% of global market) and packaging and
testing sectors (58.6% of global market), and second largest IC design sector (20.1% of global
market). When it comes to making the most advanced chips, Taiwan leads the way. Taiwan
manufactures approximately 70% of chips under seven nanometers and is at the cutting edge of
two nanometer process R&D.

South Korea:

Semiconductor manufacturing is a major economic industry in South Korea has emerged as the
major economic industry with regard to Semi- Conductors manufacturing . Companies like
Samsung Electronics and SK Hynix emerging as leading semiconductor manufacturers
globally.It leads the production of NAND and DRAM memory chips, essential for managing
and storing data on devices like smartphones, PCs, and SD cards.

It plans to establish the world's largest semiconductor cluster in Gyeonggi Province, investing
approximately $470 billion over the next 23 years in collaboration with SK Hynix and Samsung.

United States
US also remains a key player in semiconductor manufacturing, due to its robust innovation
ecosystem, world-class research institutions, and the presence of industry leaders like Intel and
NVIDIA.

It influences the global market, particularly through export controls on certain electronic design
automation (EDA) software types. The US government has recently also taken steps to revitalize
domestic production through initiatives like the CHIPS and Science Act, which aims to
incentivize the construction of new fabrication facilities on American soil.

Japan

Japan is home to more than 100 semiconductor fabrication plants owned by Japanese, American,
and Taiwanese firms. Japanese companies like Tokyo Electron and Nikon are renowned for
producing cutting-edge micro-lithography tools and other masking equipment critical in the
fabrication process, while firms like Shin-Etsu are critical suppliers of silicon wafers and other
raw materials. In 2021, Japan's Ministry of Economy, Trade, and Industry (METI) announced a
core strategy for its semiconductor and digital industries, focusing on forming partnerships with
the US, developing future semiconductor technologies through the establishment of the leading-
edge semiconductor technology center (LSTC) and R&D center, encouraging chip
manufacturing bases like Japan advanced semiconductor manufacturing (JASM) with TSMC,
and providing subsidies for domestic chip production.

Key companies involved in the semi- conductors industries

Strategies implemented by these countries for such a growth in the sector:

1.Infrastucture investment

2. Public –Private Collaboration

3.Export promotion

4.Strategic industrial policy

States and their respective policies:

Gujarat:

Gujarat is the first Indian state to launch a policy specifically for the semiconductos sector which
is the Gujarat Semiconductor Policy (2022–2027).This policy was a factor in receiving
investment from Micron’s company to build a $2.75 billion ATP facility in Sanand, Gujarat. It
seeks to develop a “Semicon City” in the Dholera Special Investment Region (SIR), which it
intends to become a manufacturing hub of semiconductor and display fabs . The policy brought
in seeks to facilitate eligible semiconductor and display fab projects with land allotments;
expedited process approvals; ready access to power, water, and gas utilities; and generous fiscal
incentives.16 For the Dholera Special Investment Region, eligible projects will receive a 75
percent subsidy on the procurement of the first 200 acres of land, while additional land for
upstream or downstream projects will receive a 50 percent subsidy on land cost. Other incentives
include a one-time reimbursement of 100 percent stamp-duty and registration fees paid to the
government, a fixed water tariff at 12 rupees per cubic meter for five years, and a capital subsidy
of 50 percent for desalination plant. The policy also offers a power tariff subsidy of 2 rupees per
unit for 10 years.17 Gujarat has further committed to implement a single-window clearance
mechanism to expedite clearances and avoid bottlenecks. 18

Karnataka:

It is already a leader in this sector contributing 10 percent of India’s national electronics output
and maintaining over 100 fabless chip design houses and emerging as the largest chip design
hub in India. One of the driving policies supporting the ESDM sector is the “Special Incentives
Scheme for the ESDM Sector 2020–2025,” which includes a 20 percent capital investment
subsidy for capital expenditure on plants and machines; a 25 percent and subsidy for expenditure
on land up to 50 acres; reimbursements for stamp duties, registration fees, and land conversion
fees; incentives on power and electricity duties; and a production linked incentive scheme. The
government of Karnataka has also continued to develop the infrastructure and labor environment
needed for a larger semiconductor industry with two Electronics Manufacturing Clusters (EMCs)
being built in Mysuru and Hubballi in the state.It has also signed an MOU with Kaynes
Technology for the Rs 3,750 crore for a printed circuit board manufacturing plant.

Odisha

Due to its startaegic location , Odisha has always had an upper hand on the availability of natural
resources , it is also rich in minerals such iron ore, bauxite, manganese, and coal, which are

16
Gujarat, “Gujarat Semiconductor Policy (2022–2027),”
https://dst.gujarat.gov.in/Portal/Document/1_486_Gujarat_Semiconductor_Policy_2022_27_Brochure _2707.pdf
17
“Gujarat announces ‘Semiconductor Policy’ with heavy subsidies,” The Hindu Business Line
18
Niyati Parikh, “Gujarat becomes first state to launch semiconductor policy” Times of India, July 27, 2022,
https://timesofindia.indiatimes.com/city/ahmedabad/gujarat-becomes-first-state-to-launchsemiconductor-
policy/articleshow/93162907.cms.
essential raw materials for various industries. It recently came up with Semiconductor and
Fabless policy in July 2023 . Odisha’ Semiconductor’s and Fabless policy 2023 will offer 25%
Incentives for Silicon, Compound, Display & ATMP. It will offer support for 25 undergrad and
25 Postgrad Institutes for R&D and Capacity building.It has become the '1st state' to offer DLI
incentives for the Fabless companies in addition to government of India’s Incentives under the
future Design scheme. It is also the only state to have come up with incentives for the fabless
product or IP companies. 20 % incentives are provided for Fabless product/IP companies,
bringing it to a total of 70%, including 50% by the government of India.

RAM & MRAM Group a UK based company has signed an MoU with the state of Odisha to
establish a Semi- Conductor Fab Project worth 2 Billion with the stte already recieving 30,000
crore as intial investment.that they would invest Rs 2 lakh billion in Odisha to build a
semiconductor facility

Tamil Nadu

Manufacturers operating in Tamil Nadu produce 62 percent of the computers and peripherals
India produces and 17 percent of the electronic components India manufacturers. Semiconductor
companies are active in Tamil Nadu, mostly in design activities which are KLA Tencor,
Qualcomm, Applied Materials, Tessolve Semiconductor, Sanmina, Coherent, and the
aforementioned Mindgrove Technologies. To attract semiconductor value chain activity, Tamil
Nadu has developed a “Flagship Investment Promotion Subsidy” program whereby investors can
choose one of three options: 1) up to 40 percent flexible capital subsidy; 2) 10–25 percent fixed
capital subsidy; or 3) 1.5–2 percent turnover subsidy for 10 years.228 To support pre-operations
setup, Tamil Nadu offers a 50–100 percent concession on stamp duties, a 25 percent subsidy on
environmental measures, and a 20–50 percent land subsidy. With regard to post-operations
support, it offers a 100 percent exemption from electricity duties for five years, industrial
training of $450 per worker, R&D training of $1,500 per worker, and a (capped) 50 percent
subsidy for IP creation and quality certifications.

Uttarpradesh:
Uttar Pradesh’s Semiconductor Policy is designed to attract major investments by offering robust
fiscal and non-fiscal incentives. The policy provides fiscal support based on a percentage of the
project cost, aligned with MeitY guidelines, and offers interest subsidies on loans up to ₹200
crore. To encourage innovation, the policy includes patent reimbursements—75% for domestic
patents (up to ₹10 lakh) and 75% for international patents (up to ₹20 lakh). It grants 100%
exemption on stamp duty for land purchase or lease and waives electricity duty for 10 years. The
state ensures dual-grid power supply with a cheaper tariff subsidized by the government and
offers a 50% exemption on intrastate wheeling charges for 25 years. R&D initiatives receive
support with 25% of setup costs (up to ₹10 crore) for standalone centres, while Centres of
Excellence can avail up to 50% funding (maximum ₹10 crore). For worker housing, the policy
provides 10% of the cost or ₹10 crore, disbursed over seven annual installments. The
semiconductor sector is also granted "Essential Services" status under ESMA, ensuring
uninterrupted operations. The state guarantees 24/7 access to water and electricity, supports
renewable energy use, and offers power banking options. Industrial housing provisions further
ensure operational continuity and investment security. Notably, the Hiranandani Group’s Tarq
Semiconductor has already submitted a proposal to invest ₹28,440 crore under this policy.
Why aren’t other states growing in this industry?

• LACK OF FOUNDATIONAL INFRASTRUCTURE IN THE IT AND

AUTOMATION SECTOR
• HIGH RISK AND CAPITAL ISECTOR
• FOCUSED ON OTHER SECTORS FOR THEIR GROWTH
• GEOTRATEGIC APPROACH TAKEN INTO CONSIDERATION
• LACK OF FISCAL SUPPORT AND INCENTIVES
• SHORTAGE OF SKILLED TALENT AND EXPERTISE
• LACK OF ADVANCED TECHNOLOGY
Current growth drivers in the Semi – Conductor Industry

1. Data centres, storage, servers – AI, automotive, cloud, GPU, HBM , SSD, NAND

2. Consumer electronic- Smartphones, PC’s, smart homes, ar/xr applications

3. Automotive –Electrification,autonomous driving,advanced driver- advanced systems,

V2X communication

4. Telecom and networking- Iot, 5g, edge

5. Industrial electronics –Smart manufacturing energy

INTIATIVES TAKEN BY THE GOVERNMENT :

The only way any country could attract investments and more development is by putting forward
policies to provide incentives and benefits for those investing or manufacturing in such
industries In December 2022, India established the ISM, a government organization to guide the
promulgation of central government policy and incentive packages to attract semiconductor-
sector investment across each key phase of semiconductor production: design, fabrication, and
ATP (with additional incentives to attract display fabs).The heart of the effort is the Rs 76,000-
crore (approximately $10 billion) “Semicon India Programme,” which includes a variety of
mechanisms designed to accelerate development of various facets of India’s semiconductor
ecosystem.

The program’s flagship fiscal incentive devotes $10 billion to a match package, wherein the
Indian central government offers to cover 50 percent of the project cost with the relevant Indian
state kicking another 20 to 25 percent to companies establishing semiconductor foundries (at any
node level), ATP/OSAT facilities, or display fabs (e.g., LCDs or AMOLED). Additional target
sectors include MEMS (micro-electrical mechanical systems), sensors, compound
semiconductors, and discrete devices.
To accelerate the development of India’s semiconductor design ecosystem four schemes have
been introduced under the aforesaid programme:

1. Modified Scheme for setting up of Semiconductor Fabs in India’ extends a fiscal

support of 50% of the project cost on pari-passu basis for setting up of Silicon CMOS
based Semiconductor Fabs in India.
2. ‘Modified Scheme for setting up of Display Fabs in India’ extends fiscal support of
50% of Project Cost on pari-passu basis for setting up of Display Fabs in Indi
3. ‘Modified Scheme for setting up of Compound Semiconductors / Silicon Photonics /
Sensors Fab / Discrete Semiconductors Fab and Semiconductor Assembly, Testing,
Marking and Packaging (ATMP) / OSAT facilities in India’ extends a fiscal support
of 50% of the Capital Expenditure on pari-passu basis for setting up of Compound
Semiconductors / Silicon Photonics (SiPh) / Sensors (including MEMS) Fab/ Discrete
Semiconductor Fab and Semiconductor ATMP / OSAT facilities in India.
4. ‘Design Linked Incentive (DLI) Scheme’: In addition to the design infrastructure
support, the scheme provides “Product Design Linked Incentive” of up to 50% of the
eligible expenditure subject to a ceiling of ₹15 Crore per application and “Deployment
Linked Incentive” of 6% to 4% of net sales turnover over 5 years subject to a ceiling of
₹30 Crore per application.

Government has also approved modernisation of Semi-Conductor Laboratory, Mohali as a

brownfield Fab

Further initiatives created by the government include the Scheme for Promotion of
Manufacturing of Electronic Components and Semiconductors (SPECS).

SPECS offers a 25 percent incentive for eligible capital equipment (CapEx), including into plant,
machinery, equipment, R&D, and utilities, targeting segments such as semiconductor-grade
chemicals and gases, capital goods needed in semiconductor manufacturing (e.g., lithography
tools), and engineering and R&D activities supporting the development of semiconductor capital
goods.19

PRODUCTION LINKED INCENTIVE SCHEME (PLI) FOR LARGE SCALE

ELECTRONICS MANUFACTURING :

PRODUCTION LINKED INCENTIVE SCHEME (PLI) FOR IT HARDWARE

19
India Semiconductor Mission (ISM), “Building Semiconductor Manufacturing Ecosystem in India: Semicon India
Programme” (power point presentation, New Delhi, India, October 4, 2023.)
Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme

To develop a roadmap for "India as a Semiconductor Talent Nation", a committee was

constituted in August 2022 with the representatives from semiconductor industry, academia and
Government. All India Council for Technical Education (AICTE) has launched the following
model curriculum for UG, Diploma, Minor Degree in Semiconductor domain on 18.02.2023 as a
step towards creation of Talent pool in Semiconductor domain:

1. B. Tech in Electronics Engineering (VLSI Design and Technology)

2. Diploma in IC manufacturing
3. Minor Degree in Electronics Engineering (VLSI Design and Technology)

Under the Chips to Startup (C2S) Programme being implemented at 113 academic institutions/
R&D organizations/ Start-ups/ MSMEs, 85,000 number of high-quality and qualified engineers
are being trained in several areas. These include Very large-scale integration (VLSI) and
Embedded System Design as well as development of 175 ASICs (Application Specific Integrated
Circuits), working prototypes of 20 System on Chips (SoC), 30 FPGA based designs and 30 IP
Cores over a period of 5 years.

Key recent investments in this sector:

1. On May 14, 2025, India’s Union Cabinet approved the establishment of an additional
semiconductor manufacturing facility. This newly sanctioned plant is a joint venture
between HCL and Foxconn, set to be located near Uttar Pradesh’s Jewar Airport within
the Yamuna Expressway Industrial Development Authority (YEIDA) region. As outlined
in the official announcement, the facility will produce display driver chips for mobile
phones, laptops, automotive systems, PCs, and a wide range of other display-equipped
devices. The plant will have a design capacity of 20,000 wafers per month. This latest
unit has an INR 37 billion investment (US$433.6 million).

2. India Semiconductor Mission (ISM), a central government body, has signed a fiscal
support agreement with Tata Electronics and Tata Semiconductor Manufacturing for
establishing a semiconductor facility in Dholera, Gujarat. Tata Electronics will invest
over INR 910 billion (US$10.44 billion) to establish a semiconductor fabrication plant in
Dholera’s Special Investment Regions (SIR) with a production capacity of 50,000 wafers
per month. The central government, through ISM, will provide 50 percent financial
support for eligible project costs. Tata has partnered with Taiwan’s Powerchip
Semiconductor Manufacturing Corporation for the plant, which will cater to global
markets in automotive, computing, communications, and AI sectors

3. CG Power and Industrial Solutions Limited’s has proposed for setting up an OSAT
facility in India with an investment of ₹7,584 Crore was also approved in February 2024.
The facility will be set up as a joint venture partnership with Renesas Electronics
America Inc., USA, and STARS Microelectronic, Thailand. The Technology would be
provided for this facility by Renesas Electronics Corporation, Japan and STARS
Microelectronic, Thailand. The production capacity would be around 15.07 million Units
per day.
 4. Kaynes Technology India Limited (KTIL) will be providing investment for setting up of
Outsourced Semiconductor Assembly and Test (OSAT) facility at Sanand, Gujarat for
Wire bond Interconnect, Substrate Based Packages which was approved in September,
2024. This facility will be set up with an investment of ₹3,307 Crore.

5. The start of the development of a semiconductor unit in Morigaon, Assam which is

headed by Tata Semiconductor Assembly and Test Pvt Ltd (TSAT). This project, set to
become one of the country’s premier manufacturing sites, as it aligns with the nation’s
broader goal of establishing a self-sufficient semiconductor ecosystem. With an
investment of Rs. 27,000 crore, the Morigaon facility is expected to produce up to 48
million semiconductor chips per day, employing advanced packaging technologies like
flip chip and Integrated System in Package (ISIP).

Step that India can take to emerge as a key player in this industry:

• Attract investment & focus on strategic international partnerships

• Invest in low-cost energy, water access, and industrial infrastructure
• Develop local value chains for end-to-end manufacturing
• Partner with universities to expand skilled talent
• Improve ease of doing business & offer targeted incentives

Conclusion:

The recent initiatives undertaken by the Government of India under the Indian Semiconductor
Mission have attracted investments aimed at establishing semiconductor plants and facilities
across several states. With this , many states have introduced their own fiscal support and
incentive-based policies to foster the growth of this critical industry. Startups and manufacturing
hubs have also been extended substantial benefits to encourage domestic development. With an
increasing focus on becoming a hub for R&D and chip design, India is also well-positioned to
develop a robust semiconductor manufacturing ecosystem. Strategic investments and global
partnerships with leading companies would further enable India to emerge as a major player in
the global semiconductor market.