India's semiconductor ecosystem takes shape with $21 billion pipeline

The tough act starts now, to build and scale up, and emerge as a global chip hub

In the semiconductor industry, assembly, testing, marking, and packaging (ATMP) and outsourced semiconductor assembly and test (OSAT) are the final, critical phases before chips are shipped to diverse users — smartphones, laptops, automotive, consumer electronics, and other product manufacturers. 

These processes contribute 12–15 per cent of a chip’s total value. In India’s budding semiconductor landscape, this is where the action is. Government-backed initiatives, at both central and state levels, are kickstarting chip manufacturing from the finish line, establishing ATMP/OSAT units led by tech giants and strategic alliances — alongside one fabrication plant by Tata Electronics. 

More than $21 billion worth of investments have been announced across a dozen projects. When all are operational in the next few years, they will produce 91 million chips per day, according to the India Electronics and Semiconductor Association (IESA).  At present, India consumes $40 billion worth of chips, all imported. By 2030, chip demand will increase to $103 billion, and at least one-fifth of this will be met by domestic production. 

Tata Electronics’ $11 billion fab in Dholera, Gujarat, stands as the centerpiece. When completed by 2027, the fab will have a capacity of 50,000 wafers per month, serving segments such as automotive, telecom, and artificial intelligence (AI). Others are ATMP/OSAT units from Micron Technology, Kaynes Technology India, CG Power, and state-government back projects, including the proposed HCL-Foxconn unit in Greater Noida, Uttar Pradesh. 

Micron’s $2.75 billion ATMP plant in Sanand, Gujarat — India’s first large-scale packaging facility for memory chips, which go into USB drives, notebooks etc — is expected to start churning out chips by the end of this year. The Tata group also has a ₹27,000 crore ATMP unit – Tata Semiconductor Assembly and Test – coming up in Jagiroad, Assam. It will be capable of processing 48 million chips daily to cater to demand from sectors such as automotive, electric vehicles, telecom, and consumer electronics. 

 

A full-scale, ground-up fab needs heavy investments and is far too complex. Hence, the focus has largely been on ATMPs. “These units will create the pull factor for more fabrication units later. It allows India to establish a beachhead in semiconductor manufacturing, attract ecosystem partners, and build talent — before going deeper into fabs,” said Ashok Chandak, president of IESA and Semiconductor Equipment and Materials International (SEMI) India. 

“All projects are in factory setup mode. In the next few years we will see the impact of these efforts,” added Sudeep Shivalli, regional senior director, Go To Market (GTM), Synopsys India. California-based Synopsys has a strong chip design ecosystem in India and supplies tools and services to semiconductor design manufacturing industry.  

“Semiconductor manufacturing is too complex and the ecosystem gets built over time with partnerships with global value chain suppliers,” he said. “A start has been made, and now it will take at least 2-3 years to build a robust semiconductor ecosystem in India.” 

The projects include HCL-Foxconn’s ₹3,706 crore OSAT facility, which will produce 20,000 wafers per month for display driver chips used in consumer electronics. “This combines HCL’s engineering strength with Foxconn’s semiconductor capabilities,” said Roshni Nadar Malhotra, chairperson, HCL Group, in a statement. 

Apart from HCL-Foxconn, the state-backed projects include Suchi Semicon in Surat (Gujarat), RRP Electronics in Maharashtra and RIR Power in Bhubaneswar (Odisha). 

Who will buy the chips? 

“Semiconductors are a strategic asset. Packaging is a start, but India must aim higher — advanced packaging, fabs, and eventually, product companies,” said Satya Gupta, president of the VLSI Society of India, which promotes the research ecosystem in semiconductors. “Right now, we are building factories. Tomorrow, we need buyers of the chips they produce.” 

Chip packaging units need to tie up with customers upfront to ensure there’s a buyer for their output – much like the world’s largest semiconductor contract manufacturer, Taiwan’s TSMC, has Nvidia among its main buyers. “Also, India needs its own product companies to control chip design and demand,” Gupta added. 

CG Power and Industrial Solutions is establishing an OSAT facility in Sanand. This project is a joint venture with Japanese Renesas Electronics and Stars Microelectronics. The facility aims to manufacture chips for various applications, including automotive, consumer, industrial, and 5G telecom.  

Meanwhile, Kaynes Technology Semicon’s ₹3,300 crore unit in Sanand, which got approval in September last year, has already completed one pilot assembly line. US-based Alpha & Omega Semiconductor (AOS) is its anchor customer, and Kyanes is making 11 products for the company in the area of power MOSFET (a type of transistor designed to handle high-power levels) and integrated power modules. 

“We have a five-year agreement with AOS, and they will buy 60 per cent of our phase one capacity,” said Raghu Panicker, CEO, Kaynes Technology Semicon. “The next set of customers for our chips will come from Japan-based AOI Electronics and Penang (Malaysia)-based Globetronics.”  

The company also plans to make chips for hi-tech products like railway signalling, automotive and medical devices.  

Eye on the global market 

Globally, Taiwan controls over 40 per cent of the OSAT market; Malaysia, about 14 per cent. India’s current ambition is to claim 25 per cent of this segment in a decade, up from zilch at present. 

But the real value remains in upstream processes: Front-end wafer fabrication and, ultimately, chip design. As things stand, most Indian ATMP/OSAT units will package chips, which are designed and fabricated elsewhere. 

Yet, this is a necessary foundation. “We have to learn to walk before we can run,” said Sanjiv Narayan, cofounder of Syrma SGS Technology, a 30-year-old electronics manufacturing services firm. “These projects will drive domestic chip 

consumption and reduce imports,” Narayan added.  

The ₹3,700 crore Syrma SGS has 13 factories and manufactures a range of electronic products, including automotive, telecom, industrial electronics and medical devices. At present, Syrma SGS and other electronic manufacturers, like Dixon Technologies and SFO Technologies, imports the chips that go into the electronic products they make. 

The domestic electronics, automotive, electric vehicle (EV), and telecom sectors — currently heavily import-dependent — are all potential buyers of chips that will roll out for the local factories. According to EY India’s co-leader, inbound investment growth group and tax partner, Kunal Chaudhary, “While front end wafer fabrication often draws the most attention, it is the ATMP/OSAT processes that transform silicon wafers into fully functional semiconductor devices ready for integration into electronic systems.” 

Chaudhary emphasised that by investing in this sector, “India not only secures its self-reliant technological future, but also positions itself as a pivotal player in reshaping global tech dynamics.” 

Given the complexities of the processes and the fact that knowledge gaps need to be bridged, the domestic chip industry is also looking at collaborations.  

For instance, a key partnership pushing this vision forward is between Tata Electronics and Synopsys, a global chip design tools leader. The two signed a memorandum of understanding in 2024 to support the Dholera fab with design-to-silicon solutions, including a foundry design platform. “Tata’s CMOS fab will be a turning point,” said Synopsys India’s Shivalli. “We’re still at early stages, but things are moving.” 

The jobs it will bring 

Interestingly, in a job market increasingly worried about AI-led layoffs, the nascent semiconductor sector being driven by ATMP/OSAT units offers new opportunities. 

According to IESA’s Chandak, the planned units in India will employ 35,000 to 40,000 directly, and also create 10x indirect jobs. At the top deck, a lot of foreign talent is being hired as India lacks the talent pool.  

For example, TSAT has tapped talent from Intel for its Morigaon, Assam, unit. Fab talent requires skills in photolithography, plasma etching, chemical-mechanical planarisation etc — areas where skills are not available locally. The industry is partnering with global institutions like Purdue University and companies including IBM, chip makers AMD and Micron Technology, and US-based supplier of semiconductor devices Lam Research, besides setting up boot camps and labs with IITs and IISc, to bridge the skills gap. 

Much will depend on how quickly the talent gets ready to deliver the chips and execute processes according to global scale and quality. “We must deliver high-quality products to get anchor customers,” said Panicker of Kaynes. 

This start could lead to an upgrade from basic packaging to complex packaging and fabs – and eventually go beyond assembling chips to designing them for homegrown products. Gupta said, “We’re laying a foundation. But without product companies, we’re just service providers. The real game lies in controlling chip demand, not just supplying chips.” 

For now, the mix of strategic collaborations, large-scale investments, and skill-building is creating a semiconductor ‘pull factor’. As ATMPs and OSATs start to roll out chips, the demand for localised materials, chemicals, and design services will grow.  

These first projects are not the end — they’re the beginning that will help India, at least, catch up with the world’s chip hubs. 

The author is a New Delhi-based independent journalist