By staying out of the competition to make cutting-edge AI chips, New Delhi is taking a smart approach to achieving its semiconductor ambitions
India is plowing billions into becoming a global chipmaking hub, while smartly taking a route different from that of industry giants racing to produce the most advanced processors powering the AI boom.
The South Asian country already has a substantial presence in semiconductor design. Now, New Delhi wants to establish a domestic manufacturing industry and become a reliable global supplier.
That ambition was on display at the Semicon India event in New Delhi in September, when Prime Minister Narendra Modi pitched India as an alternative manufacturing destination amid growing demand and concerns over global chip production bottlenecks and supply uncertainties.
“The world needs new and trusted locations for chip manufacturing and India is preparing itself for this,” Modi told the conference.
A month earlier, in his Independence Day address, Modi had made semiconductor development an important component of the wider Make-in-India manufacturing push. “Chips are indispensable; without them, the world would come to a standstill,” he noted.
The initiative comes as artificial intelligence, data centers, electric vehicles, and expanding electronics production drive demand for semiconductors. But India’s strategy is not to immediately challenge the industry’s technological leaders on their own terms.
“I believe this is one of the smartest and most far-sighted choices India has made,” the co-founder and CMO of chip startup Indiesemic, Jinal Shah, told RT in emailed comments. Indiesemic is based in Ahmedabad, the capital of Modi’s home state Gujarat.
Why India is betting on older chips
While manufacturers such as Taiwan’s TSMC and South Korea’s Samsung compete to produce ever-smaller processors, including 2-nanometer chips used in high-performance computing and AI, India is initially concentrating on established technologies known as mature nodes.
These chips, ranging from 28 to 180 nanometers, may not be at the cutting edge of technology, but are essential to automobiles, industrial machinery, telecommunications, household appliances, and electricity networks.
Even the AI boom needs them. Because data centers cannot work without power-management chips, networking components, and other such chips.
Mature-node technologies account for nearly 70% of global chip production by volume, said Neil Shah, the co-founder and vice-president of research at the think tank Counterpoint Research. Starting with mature-node fabrication, specialized semiconductors, and conventional chip assembly and testing is “the only commercially rational entry point for India,” Shah told RT.
A leading-edge 3-nanometer fabrication plant can cost more than $15 billion to construct, according to Indian government think tank NITI Aayog. Making them also requires specialized equipment and expertise accumulated over decades – the latter especially is why the US has found it difficult to quickly replicate TSMC’s manufacturing success.
Pursuing 2-nanometer production is “simply too expensive,” the secretary at India’s Electronics and Information Technology Ministry, S. Krishnan, recently admitted.
Although eclipsed by the AI chips, mature-node chips are a high-growth market. Industry researcher TrendForce reported in June that rising demand for power-related semiconductors, including those used in AI infrastructure, was tightening manufacturing capacity and could sustain price increases into 2027.
India designs chips for the world. Why doesn’t it make them
India is hardly a newcomer to the semiconductor business. The country accounts for nearly a fifth of the global chip-design workforce and hosts major research and development centers for companies such as Intel, Qualcomm, and Texas Instruments.
Indian engineers contribute to the development of sophisticated chips used around the world. Yet, much of the actual manufacturing takes place overseas.
Imports currently meet an estimated 90%-95% of India’s semiconductor demand, according to NITI Aayog. The think tank projects that the country’s chip market will grow to more than $200 billion by 2035, driven by electronics, automobiles, telecommunications, and digital infrastructure.
Getting into chip fabrication gives India two opportunities: reducing the dependence on imported chips for its expanding domestic industries, and supplying overseas markets looking for alternative manufacturing locations.
Chips on display, during the India AI Impact Summit at the Bharat Mandapam on February 20, 2026, in New Delhi, India.
Bridging the gap: From designing chips to making them
India’s first semiconductor mission resulted in 12 approved manufacturing projects involving more than $17 billion in planned investment. These include a silicon fabrication plant, two specialized semiconductor facilities, and nine assembly, testing, and packaging units.
Five of the nine units have already begun commercial production, including those operated by US memory-chip maker Micron and Indian companies Kaynes Semicon, CG Semi, CDIL Semiconductor, and Suchi Semicon. Modi inaugurated commercial production lines at CDIL in Punjab and Suchi Semicon in Gujarat during the September industry event.
However, these units largely focus on assembly, packaging and testing rather than manufacturing integrated circuits directly on silicon wafers. Building that capability is the next major step.
The Semicon 2.0 program, backed by $13.5 billion, is intended to build an industry around such factories, extending support to equipment manufacturers, specialized chemicals, raw materials, chip design, research, and workforce development.
“India currently relies almost entirely on foreign nations for these foundational raw materials and machinery,” the director of the Sudeet Foundation, Raghava Srinivasan Balakrishnan, told RT.
Indian conglomerate Tata Group is building an $11 billion fabrication plant in Dholera, Gujarat, with Taiwan’s Powerchip Semiconductor Manufacturing Corporation. Commercial production is targeted for mid-2028, initially using 55-nanometer and 90-nanometer technology before moving to 28 nanometers.
At the September conference, US-based Applied Materials announced plans to invest $5 billion in India over the next decade, including in research, domestic supply chains, and workforce development.
The government is also trying to help Indian companies move from designing chips to developing commercially viable products of their own.
Centralized access to professional design tools and infrastructure “significantly lowers the initial capex barriers,” technology policy researcher Pranay Kotasthane wrote in August, welcoming the support for chip-design startups.
Could India eventually make advanced chips?
New Delhi’s ambitions don’t stop at mature-node manufacturing.
In a roadmap released in May, NITI Aayog proposed building a semiconductor value chain worth $120 billion-$150 billion by 2035, with India becoming one of the world’s top three destinations for outsourced semiconductor assembly, testing, and advanced packaging.
The roadmap identifies advanced packaging as an opportunity. Combining different chips into increasingly sophisticated packages can improve performance without relying entirely on the race to make transistors smaller.
”Instead of chasing the global wafer race from behind, India should define its own pathway,” the report says.
The NITI Aayog also recommends building strength in specialized analog semiconductors and materials, such as silicon carbide and gallium nitride, which are important for electric vehicles, renewable energy, and industrial power systems.
India is not abandoning the ambition of making cutting-edge processors altogether, but just being pragmatic by going for the low-hanging fruit first.
Getting to the top of the hill will require experience in operating commercial wafer fabrication plants, developing a skilled workforce, and building a domestic network of equipment and materials suppliers.
For now, the country is seeking to establish itself in parts of the semiconductor industry where demand is already substantial and its existing strengths offer it a clear commercial edge.
