Semiconductor Manufacturing: How India Becomes a Hub?

With the global semiconductor industry undergoing major transformation, India is emerging as a semiconductor manufacturing hub in the search for a diversified and resilient chip production ecosystem. In the midst of growing geopolitical tensions and the need to lessen reliance on China, the world’s tech behemoths are pouring billions of dollars into India’s semiconductor industry. This strategic move is fuelled by India’s strong policy initiatives, a growing talent pool, and the possibility of becoming a major player in the global semiconductor landscape.

The Need to Diversify Outside of China

The COVID-19 pandemic, in addition to increasing U.S.-China trade tensions, has revealed weaknesses in global supply chains, especially in the semiconductor field. China’s supremacy in semiconductor manufacturing has encouraged countries and corporations to look for alternative hubs to reduce the risks of over-dependence on a single source. India, which has a democratic form of government, is strategically located, and is committed to economic reforms, provides an attractive alternative for the global investors who seek to diversify their semiconductor supply chains.

Strategic Initiatives by India in Semiconductor Manufacturing

Aware of the strategic importance of semiconductors, the Indian government initiated the India Semiconductor Mission (ISM) in 2022, with INR 76,000 crore (about $10 billion) to strengthen the semiconductor manufacturing and design capabilities. This initiative will set up semiconductor fabrication plants, design and testing labs, and finance global companies that are coming up in India. 

Apart from ISM, India has also cleared investments worth $15.2 billion to establish three new semiconductor plants, including its first semiconductor fabrication plant.  These policy measures reflect India’s ambition to become a global semiconductor manufacturing hub.

Investment in India’s Semiconductor Ecosystem Worldwide

The aggressive policies of India have attracted a lot of global investment in its semiconductor industry. Notably, Intel announced a $100 million investment in India, which is to be spent on research and development to enhance its presence and create solutions for the global market.  This step not only increases Intel’s presence in India but also helps in the development of the semiconductor design and innovation ecosystem of the country.

Likewise, Taiwan Semiconductor Manufacturing Company (TSMC), the biggest contract chipmaker in the world, has demonstrated great interest in India’s semiconductor scenario. TSMC’s involvement in the Gujarat SemiConnect Conference and its talks on possible collaborations are a strategic alignment with India’s semiconductor aspirations.

In addition, a joint venture between Intel and TSMC has been reported, which is supposed to run Intel’s chip factories, with TSMC holding a 20% stake in the new company.  This partnership is an indication of a united front by major global tech companies to tap into India’s potential in semiconductor manufacturing.

Gujarat: A Semiconductor Investment Hotspot

Gujarat has become a hotbed for semiconductor investments in India. The Gujarat SemiConnect Conference has played a key role in attracting the world’s semiconductor players such as Intel and TSMC to look for investment opportunities in the region. In the 2025 edition of the conference, eight Memorandums of Understanding (MoUs) worth more than ₹1.5 lakh crore (around $20 billion) were signed with the objective of increasing semiconductor manufacturing and innovation in Gujarat. 

Major announcements were partnerships with global semiconductor companies and local players to establish chip manufacturing units and assembly plants in Gujarat. These developments highlight the strategic value of Gujarat in India’s semiconductor roadmap.

Challenges and the Road Ahead

India’s semiconductor aspirations are praiseworthy but not without problems. Historically, bureaucratic inefficiencies, inconsistent regulations, and infrastructure constraints have been impediments to large scale manufacturing projects. Further, India’s semiconductor ecosystem is in its infancy and needs massive investment in skill development, research and infrastructure to align with global standards.

However, the united efforts of the government along with the growing global investment is a positive trend for the semiconductor sector of India. The partnership between the world’s tech giants and Indian stakeholders is critical to addressing the existing challenges and unlocking India’s potential as a global semiconductor manufacturing hub.

In summary 

India is a promising player in the global semiconductor manufacturing due to the convergence of strategic policy initiatives, global investment, and collaborative ventures. The investment by tech giants such as Intel and TSMC in India’s semiconductor ecosystem is a part of a larger trend of diversifying supply chains and reducing dependence on China. With India increasingly building up its semiconductor capabilities, it is well placed to play an important role in determining the future of global technology manufacturing.