Can India Make a Dent in the $2 Trillion Global Chip Market?
As the April 2 deadline for US President Trump’s proposed 25% tariffs on semiconductor imports approaches, India prepares for potential ripple effects. While the country does not directly export semiconductors to the US, its electronics manufacturing sector heavily relies on the import of semiconductor-grade materials and manufacturing equipment. This could result in higher costs for domestic manufacturing, forcing companies such as Apple to deal with increased expenses, which may strain their sales in India. However, experts caution that India should build a strong local supply chain to reduce production costs. “The concern is not just about making chips, but making chips that meet global efficiency and cost requirements. Otherwise, Indian manufacturers will still prefer imports,” said Hitesh Garg, VP and India country manager at NXP, at the Invest Karnataka 2025 event last month. As India navigates this high-stakes journey, the balance between investment, market demand, and ecosystem growth will determine the success of its semiconductor dreams. IT minister Ashwini Vaishnaw recently said the country is poised to have its first Made-in-India chip by 2025, aiming to establish itself as a product nation and enhance its semiconductor ecosystem. Santhosh Kumar, president and managing director at Texas Instruments India, argued that rather than striving for complete self-sufficiency, India should integrate into the global semiconductor supply chain by leveraging its strengths in design and software. “You can never be a self-reliant country doing everything in semiconductors,” Kumar said. “I don’t see it happening at least in the next 10 years.” Considering that the semiconductor manufacturing process crosses multiple international borders before the final product is ready in India, he urged the country to carve a niche in the segment. Semiconductor fabrication is an expensive and long-term investment. Unlike software, where businesses can scale quickly, chip manufacturing requires billions of dollars in upfront investment, and profitability takes years. “The best thing that has happened is the government stepping in with $10 billion in investment. But we need to ensure the technology we invest in today won’t become obsolete in five to 10 years,” Jitendra Chaddah, MD and country head at GlobalFoundries India, said. The global semiconductor industry is projected to grow from $550 billion today to $2 trillion within a decade. However, there is concern that an oversupply of fabs worldwide could lead to lower prices, making it harder for new entrants like India to remain profitable. India’s domestic electronics market is expected to reach $3 trillion by 2047, making it one of the world’s largest consumers of semiconductors and aligning with India’s Viksit Bharat 2047 initiative. However, it is uncertain whether India’s fabs will be able to meet global standards at competitive costs. Workforce and Skill Development Gap Despite India’s strong presence in semiconductor design, there is a shortage of talent with hands-on experience in fabrication. The education system has been criticised for being too theoretical and lacking the practical training required to run fabs. In an interview with AIM, Jayashankar Narayanankutty, group director for sales at Cadence Design Systems, expressed the need for more industry focused skill-based training. The company conducts upskilling programs like the Talent Pipeline Program. He added that since there’s not much history in jobs like semiconductor designing, certain skills are still lacking. Regardless, he says the base talent is good, however, more awareness of job roles and the specific upskilling that is required. “Talent is not the issue. The issue is capability. We have world-class engineers, but they have never worked inside a fab before. That’s the muscle we need to build,” Kumar further said. To bridge this gap, experts suggest a large-scale training program where engineers gain experience in existing global fabs before returning to India. “The best way to build a skilled workforce is to send 1,000 Indian engineers to global fabs, have them train for two to three years, and bring them back. That’s how we’ll build real expertise.” Challenges in Building a Semiconductor Ecosystem For semiconductor manufacturing to thrive, India needs more than just fabs. A full ecosystem, including chip packaging, testing infrastructure, and advanced research and development, is essential. Today, India lacks many of these elements, making it reliant on imports for key raw materials and equipment. Meanwhile, comparing India with the Netherlands, a small country with two key semiconductor firms but a massive global influence, Chaddah said India needs to identify niche areas where it can lead. “No one country has everything that it takes to have a fully self-sufficient semiconductor industry,” he added. Rather than competing head-on with well-established semiconductor giants, India could specialise in areas where it already has expertise. Automotive semiconductors, AI-powered chips, and advanced materials like gallium nitride (GaN) and silicon carbide (SiC) are potential opportunities. “The car industry is a $200 billion market in India today and will only grow. The opportunity is to specialise in automotive chips; that’s where India can win,” Garg suggested. Moreover, at the VLSI Design Conference 2025, Ganapathy Subramaniam, founding managing partner at Yali Capital, stressed that two-wheelers could be a big opportunity for India. Recently, Bytes, a Bengaluru-based startup, launched a new AI-driven advanced driver assistance system (ADAS) for two-wheelers. Co-founders Prakhar Agrawal and Aayush Kumar aim to enhance road safety through deep-tech innovations in robotics, AI, and autonomous systems. Role of Government & Policy Support While India’s semiconductor incentives are among the most generous globally, investment alone is not enough. These experts stress the need for consistent policy, infrastructure readiness, and alignment between market demand and manufacturing capabilities. “The first phase of India’s semiconductor push focused on fabrication. The next phase needs to build the ecosystem, including supply chains, testing facilities, and advanced R&D.” Some even suggested that state governments should play a more active role in establishing semiconductor parks with shared infrastructure. This would lower entry costs for private investors and accelerate industry growth. The semiconductor industry is not just about setting up fabs – it’s about building an ecosystem that supports them. If India can align its investments, workforce, and supply chain strategies, it has the potential to become a major player in the global semiconductor industry. However, without careful planning and execution, profitability will remain a challenge.
India’s dependence on imports of semiconductor-grade materials and manufacturing equipment could escalate chip prices as trade war looms.
India’s dependence on imports of semiconductor-grade materials and manufacturing equipment could escalate chip prices as trade war looms.
["Chip Manufacturing", "India semiconductor", "semiconductor chips", "semiconductor industry"]
["Go", "API", "AI", "innovation", "semiconductor industry", "semiconductor chips", "India semiconductor", "RAG", "Ray", "Aim", "GAN", "R", "Chip Manufacturing", "startup"]
["AI", "Aim", "Ray", "RAG", "R", "Go", "API", "GAN", "innovation", "startup"]
An information designer who loves to learn about and try new developments in the field of tech and AI. She likes to spend her spare time reading and exploring absurdism in literature.