New Delhi, India The Indian government has announced a landmark investment of 1.26 trillion Indian rupees (US $15.2 billion) to bolster the country’s semiconductor and electronics industry, marking a significant step towards achieving self-reliance in this strategically critical sector.
The ambitious plan includes the construction of India’s first state-of-the-art semiconductor fabrication facility (fab), alongside two advanced packaging and testing facilities. Construction is expected to begin within 100 days, with the first fab slated to be operational by 2026.
The $11 billion semiconductor fab, a joint venture between Taiwan-based Powerchip Semiconductor (PSMC) and Tata Electronics, will be capable of producing 28-, 40-, 55-, and 110-nanometer chips, with a monthly capacity of 50,000 wafers. This technology, while not at the cutting edge, is widely used in various applications, including power management, display drivers, microcontrollers, and high-performance computing logic.
“This announcement marks a significant step towards establishing India as a major player in the global semiconductor industry,” said Frank Hong, chairman of PSMC. “The timing is perfect, as India has a large and growing domestic demand, and global customers are seeking supply chain resilience.”
The fab will be located in Dholera, Gujarat, and is expected to create over 20,000 skilled jobs in the region.
Packaging and Testing Push:
In addition to the fab, the government has approved investments in two packaging, testing, and assembly facilities, a sector currently dominated by Southeast Asia.
Tata Electronics will build a $3.25 billion plant in Assam, offering a range of packaging technologies, including wire bond, flip-chip, and system-in-package. The company plans to expand into advanced packaging technologies in the future.
A joint venture between Renesas, Stars Microelectronics, and CG Power and Industrial Solutions will construct a $900 million packaging facility in Gujarat, offering wire-bond and flip-chip technologies.
Generous Incentives:
India’s semiconductor incentives are now among the most attractive in the world, with the government offering significant financial support to attract investment. For a silicon fab worth at least $2.5 billion, the federal government will reimburse 50 percent of the cost, with state partners contributing an additional 20 percent.
Growing Demand and Talent Pool:
India’s semiconductor market is projected to reach $64 billion by 2026 and $110 billion by 2030, accounting for 10 percent of global consumption. The country already boasts a large pool of semiconductor design engineers, with about 20 percent of the world’s talent based in India.
The investment is expected to create a surge in new jobs and attract talented students to the field, further solidifying India’s position as a future semiconductor hub.
“This is a significant boost for the Indian semiconductor industry, benefiting not just students but the entire academic system,” said Saurabh N. Mehta, a professor and chief academic officer at Vidyalankar Institute of Technology. “It will foster the growth of startups, jobs, and product development initiatives, particularly in the defense and power sectors.”
This major investment signals India’s commitment to becoming a global leader in semiconductor manufacturing, contributing to a more resilient and diversified global supply chain.
