India preparing to become alternative chip supplier: PM Narendra Modi

ISM 2.0 will focus on six pillars, including chip design, machines and materials, fabrication, advanced packaging, R&D and talent development

India is readying itself to become the alternative supplier of semiconductor chips and solutions as the world looks to diversify its supply chains, Prime Minister Narendra Modi said on Thursday. 

“The world needs new and trusted locations for chip manufacturing and India is preparing itself for this,” Modi said during his inaugural address at the fifth edition of Semicon India being held here in the city. 

The Centre has also received investment proposals worth nearly $12 billion from companies across the semiconductor ecosystem under the second phase of the India Semiconductor Mission (ISM 2.0), Union Minister for Electronics and Information Technology (Meity) Ashwini Vaishnaw said at a press conference on Thursday. These investments are likely to be made by the companies over the next 2-3 years, he added. 

 

The second phase of India’s semiconductor journey will move beyond policy decisions and announcements of construction of semiconductor chip fabrication and packaging units, Modi said, adding that soon chips made and packaged in India would be exported across the world. 

 

Apart from the three chip packaging units — Micron Technology, Kaynes Semicon and CG Semi — that have already started commercial operations, Continental Device India’s (CDIL) Mohali unit and Suchi Semicon’s Gujarat unit also started commercial production from Thursday. 

“Wherever semiconductor ecosystems have been built in the world, they have been prepared after decades of effort. But India, with your cooperation, has worked simultaneously on chip design, manufacturing, equipment manufacturing, materials ecosystem, testing capability — and has shown success,” Modi said.

 

Under the second phase of ISM, India will strive to ensure that fabless chip companies, as well as startups that work in semiconductor chip design space grow well so that they can collaborate with global companies, he said.

 

As of September 2026, India had approved 12 semiconductor fabrication and packaging units with a total cumulative investment of more than ₹1.60 lakh crore. The total outlay under the first phase of the ISM was ₹76,000 crore.

 

Speaking at the inaugural session, IT minister Vaishnaw said the government was targeting at least 200 startups and companies designing chips in India under ISM 2.0.

 

It would be one of the six pillars of ISM 2.0, together with machines and materials, fabrication units, advanced packaging, research and development, and talent, he added.

 

The first phase of the ISM also had a component for startups in the chip design space. Of the 105 startups that had attempted chip design in phase one, nearly 20 had received venture capital (VC) funding of nearly ₹800 crore.

 

Under the second pillar of machines and materials, the focus would be on covering the entire ecosystem of capital equipment, maintenance facilities, chemicals and gases, while under the third pillar of fabrication units, the government would strive to set up additional display, memory, silicon, compound and logic fabrication units in the country.

 

The fourth, fifth and sixth pillars of ISM 2.0 will focus on scaling the existing infrastructure of packaging units, industry-driven research and development projects, and training adequate semiconductor manpower based on the inputs from semiconductor companies, Vaishnaw said.

 

The government has received investment proposals of nearly $12 billion from companies in the semiconductor equipment, materials, gases, chemicals, assembly, testing and packaging units, and substrates under ISM 2.0, Vaishnaw said at a press conference later on Thursday.

 

Overall, ISM 2.0 could lead to creation of 100,000 jobs in the Indian semiconductor ecosystem, with a lot of jobs being created by other downstream industries, Vaishnaw said.

 

ISM 2.0 was approved by the Union Cabinet in July this year with an outlay of ₹1.27 lakh crore, covering six key areas of the  semiconductor chain. It proposes a grant-plus-equity structure for smaller startups, and a co-investment or royalty-based funding and incentive payment structure for medium-sized or large domestic companies.

 

The inaugural session was also attended by Micron Technology’s Chief Executive Officer (CEO) Sanjay Mehrotra, Infineon Technologies CEO Jochen Hanebeck, and semiconductor industry body Semiconductor Equipment and Materials International (Semi) CEO Ajit Manocha.

 

Speaking during the inaugural session, Mehrotra said Micron’s Sanand facility, which began commercial production earlier this year, was now shipping Dynamic random-access memory (DRAM) and NAND non-volatile products to customers globally. The Indian teams, he said, had contributed to over 3,700 patents, inventions and disclosures so far.