What's Happening?
India is making strides in the semiconductor industry with the construction of its first commercial chip foundry for mature semiconductors in Gujarat. This $11 billion project is a joint venture between
Tata Group and Taiwan's Powerchip Semiconductor Manufacturing Corporation (PSMC), supported by Indian Prime Minister Narendra Modi's $10 billion semiconductor program. The initiative aims to position India as an alternative manufacturing hub, especially for companies looking to diversify production away from China. The foundry has already attracted interest from U.S. semiconductor giant Intel. The project focuses on producing mature chips, which are widely used in cars, appliances, and industrial equipment, rather than cutting-edge AI computing chips.
Why It's Important?
The development of a semiconductor foundry in India is significant as it could strengthen India's role in global supply chains amid a surge in global demand for chips. By focusing on mature chip technology, India is entering a more accessible segment of the semiconductor market, which could help reduce its reliance on imports and improve its trade balance. The initiative is also driven by domestic demand, expected to double by 2030. However, India faces challenges in catching up with established leaders like the U.S., Taiwan, and China, particularly in advanced chip technology. Sustained policy support and infrastructure improvements will be crucial for India's success in this sector.
What's Next?
The foundry is expected to become operational by late 2026, although delays are possible. The project represents a turning point for India, which has seen previous semiconductor plans collapse. The focus on mature chips offers a practical entry point for India's semiconductor ambitions. Additionally, more than half of India's $10 billion incentive package is dedicated to this foundry, with the remainder supporting assembly, testing, and packaging projects. These initiatives, while facing delays, are crucial for building India's semiconductor capabilities. Continued partnerships and long-term policy precision will be essential for India to scale up and compete globally.
