India is making a multi-billion-dollar entry into the global semiconductor race. But instead of jumping into the deep end, it's starting with a smart, strategic focus on assembly and testing. Here’s what that means and why it's a big deal.
The Scale of the Ambition
India has earmarked
a massive amount of capital to build a domestic semiconductor industry, with figures around $23 billion often cited. This number reflects a combination of government incentives and anticipated private investment. The core of the government's effort is the India Semiconductor Mission (ISM), which in its initial phase had a $10 billion outlay. Now in its second phase, dubbed Semicon 2.0, the programme has an expanded budget of over $13 billion and a wider scope. This initiative is designed to attract global players and nurture local champions, moving the country from a chip design powerhouse to a manufacturing hub. The goal is to reduce its heavy reliance on imports, which currently satisfy over 90% of its demand, and establish India as a reliable node in the global electronics supply chain.
Why Focus on Assembly and Testing?
The semiconductor value chain is incredibly complex. At one end is fabrication, or 'fabs'—the hyper-expensive, cleanroom-intensive process of creating chips on silicon wafers. At the other end is OSAT (Outsourced Semiconductor Assembly and Test) or ATMP (Assembly, Test, Mark, and Package). This is the crucial final stage where the finished wafers are cut, packaged into the black casings we recognise, and tested for quality before being shipped. India is strategically starting here for several reasons. ATMP facilities are less capital-intensive and quicker to build than cutting-edge fabs, which can cost upwards of $15 billion. This approach provides a lower-risk entry point into the industry, allowing India to build its ecosystem, develop a skilled workforce, and establish its credentials in the global supply chain before attempting the more challenging feat of advanced fabrication.
Key Players and Projects
This strategic push is already translating into tangible projects. The most prominent is US-based Micron Technology's ATMP facility in Sanand, Gujarat, a project with a total investment of $2.75 billion. Other key players include the Tata Group, which is setting up an OSAT facility in Assam and a major $11 billion fabrication plant in Dholera, Gujarat, in partnership with Taiwan's PSMC. This fab will focus on mature-node chips (28 nanometers and above), which are critical for the automotive, consumer electronics, and power management sectors. Additionally, companies like CG Power are establishing OSAT units, also in Gujarat, focusing on chips for microcontrollers and power electronics. As of late 2026, several of these facilities have already commenced commercial production.
Building an Entire Ecosystem
The government's 'Semicon 2.0' plan recognises that factories alone are not enough. The long term vision is to create a comprehensive ecosystem that includes not just manufacturing but also the production of specialised gases, chemicals, and equipment needed for chipmaking. A significant part of this push involves talent development. India has set an ambitious goal to train an additional one lakh semiconductor engineers, building on its existing strength of having nearly a fifth of the world's chip design workforce. By fostering everything from R&D and design to packaging and materials, India aims to climb the value chain and become a truly integrated player in the global semiconductor landscape.
Challenges and the Road Ahead
The path forward is not without its hurdles. India has attempted to build a chip industry in the past with limited success, and challenges related to infrastructure, such as the need for uninterrupted power and ultra - pure water, remain. Furthermore, building a complete ancillary ecosystem of suppliers for specialty materials and equipment will take time, and for now, India remains dependent on imports for these critical inputs. However, the current mission is seen as the most determined and well - funded effort to date. The strategic decision to start with assembly and testing is a pragmatic recognition of these challenges. It's a calculated first step in a long marathon to position India not just as a participant, but as an essential and trusted partner in the world of semiconductors.
