Building India’s Semiconductor Ecosystem—Fast: History, Constraints, Opportunities, and the Road to “Full-Stack”

Chip designing

September 8, 2025

Why Semiconductors, Why Now

Semiconductors sit at the core of everything from smartphones and base stations to cars, power grids, satellites, and AI data centers. Countries that master this stack get economic resilience, strategic autonomy, and high-productivity jobs. India has design talent and huge domestic demand—but for decades lacked fabs, advanced packaging at scale, and a deep vendor base. That’s changing: New projects span wafer fabrication, OSAT/ATMP, and design—and a coordinated push could compress a 10–15 year journey into 5–7. Recent approvals include Tata Electronics’ fab at Dholera with Taiwan’s PSMC (≈₹91,000 crore; 50,000 WSPM), an expanding Micron ATMP in Sanand, and OSAT facilities by CG Power–Renesas–Stars (Sanand) and Tata (Assam)—giving India multiple “entry ramps” into the global supply chain. Press Information Bureau ,Tata Group ,Micron Technology ,Business Wire

A Short History: From “Design-Only” to First Fabs

1990s–2010s: Design hub, no fabs. India became a global center for chip design and verification (captive centers of Intel, Qualcomm, etc.), but commercial fabs never materialized; public labs like SCL Mohali served strategic needs on mature nodes.
2014–2021: Policy scaffolding. Programs such as SMDP/C2S (manpower & MPW access) and Make in India widened the talent base; electronics manufacturing PLI created downstream demand. c2s.gov.in ,Press Information Bureau
2021–present: Semicon India Programme. The ₹76,000-crore incentive framework catalyzed the first wave: Micron’s ATMP (Sanand), Tata–PSMC wafer fab (Dholera), CG Power–Renesas OSAT (Sanand), and Tata’s TSAT in Assam (Jagiroad/Morigaon)—with global equipment OEMs like Applied Materials and Tokyo Electron investing or colocating to support local scale-up. Micron Technology ,Press Information Bureau ,Business Wire ,Tata Group ,Reuters ,The Economic Times

Where India Stands Today (2025)

Manufacturing beachheads.

Wafer fab: Tata–PSMC at Dholera, Gujarat (logic at mature nodes initially; 50k wafers/month). Press Information Bureau
ATMP/OSAT: Micron (Sanand); CG Power–Renesas–Stars (Sanand); Tata TSAT (Assam)—together anchoring assembly, test, and advanced packaging. Micron Technology ,Business Wire ,Tata Group
Ecosystem signals: Toolmakers Applied Materials (Bengaluru R&D center; $400M) and Tokyo Electron (new India offices to support Tata projects) show upstream supplier confidence. Reuters ,The Economic Times

Design and IP momentum.

DIR-V (RISC-V) under MeitY, anchored by IIT-M’s SHAKTI and C-DAC’s VEGA cores—India’s indigenous processor IP track. Press Information, Bureau vegaprocessors.in
DLI (Design-Linked Incentive) gives cash support + EDA/tool access; as of 2025, 23 chip-design projects sanctioned; 72 startups and hundreds of academic institutions using national EDA grids. Press Information Bureau ,chips-dli.gov.in
Fabless startups: Mindgrove (commercial RISC-V MCU), InCore (RISC-V IP/SoC generator), Signalchip (4G/5G baseband, NavIC). Design Reuse ,RISC-V, International EE Times signalchip.com

Legacy/strategic labs.

SCL Mohali modernization is moving through Cabinet processes; the upgrade positions SCL as a test/validation hub for academia and startups alongside strategic production. Business Today ,The Times of India

Constraints to Solve—Fast

Capital intensity & yield learning: Even mature-node fabs cost billions; yield ramps are unforgiving. Long-tenor, predictable incentives and anchor off-take are essential. (Tata–PSMC’s 28/40-nm focus is a pragmatic start.) Press Information Bureau
Utilities & permitting: Fabs need uninterrupted power, ultrapure water, hazardous-chem handling, and fast clearances; cluster-level infrastructure reduces per-unit risk.
Workforce gap: Tool, process, and yield engineers are scarce. Partnerships like Applied Materials (Bengaluru R&D) and Lam Research’s university training (targeting ~60,000 engineers) help accelerate readiness. The Economic Times ,techovedas
Tooling & materials vendor base: Local supply of gases, photoresists, slurry, specialty chemicals, quartz/ceramics, and spares is thin; international OEM colocation and supplier parks are vital. The Economic Times
Design-to-manufacturing gap: India’s fabless successes need predictable MPW shuttles, PDK access, and trusted packaging/ATE capacity to get to volume. DLI + C2S are building the pipeline but need larger tape-out budgets and shuttle cadence. c2s.gov.in

The Opportunity: Why a “Full-Stack” Bet Pays

Domestic demand (electronics, autos/EVs, power electronics, telecom, defense) can absorb mature nodes for a decade.

Export share via OSAT/advanced packaging is realistic in 2–4 years—Micron, CG Power–Renesas, Tata TSAT are first anchors; Kaynes and others are joining the packaging wave. Micron Technology ,Business Wire ,Tata Group ,The Economic Times
Strategic autonomy: Trusted chips for defence/space (SCL and future trusted foundry frameworks), power electronics (SiC/GaN), and telecom/5G/6G (Signalchip ecosystem) reduce external risk. Business Today ,Design Reuse ,signalchip.com
Jobs & spillovers: Every cleanroom job creates multiple supplier and services jobs; equipment and materials co-location compounds that multiplier. Tokyo Electron and AMAT presence is a leading indicator. The Economic Times

A 7-Pillar Playbook to Build the Ecosystem Quickly (0–60 Months)

1) Lock In the First Wafers (0–36 months)

De-risk the Dholera ramp (28/40-nm logic; automotive/PMIC/display drivers) with multi-year Government and PSU anchor orders (Railways, Power, Defence, Smart Metering) and OEM framework contracts. Press Information Bureau
Time-bound clearances & utilities: Single-window permitting; guaranteed power/water SLAs at Dholera/Sanand/Jagiroad; dedicated hazardous-waste corridors.

2) Scale Packaging/ATE First (0–30 months)

Treat OSAT as the “fast win”: expand capacity with CG Power–Renesas (Sanand), Micron (Sanand), Tata TSAT (Assam) and new entrants; attract bumping/FC-BGA, SiP, and HBM-adjacent vendors. Business Wire ,Micron Technology ,Tata Group
Tie PLI/scheme benefits to yield, cycle-time, and reliability benchmarks (JEDEC/AEC-Q100).

3) Make India a Design & MPW Powerhouse (0–24 months)

Triple the national MPW shuttle frequency; publish a quarterly shuttle calendar; subsidize first-silicon for DLI startups and DIR-V derivative cores.
Expand the national EDA grid and cloud emulation credits; pre-negotiate PDK access with foundry partners for mature nodes; keep C2S intake at scale (85,000 learners). Press Information, Bureau c2s.gov.in
Create a “Design to Volume” fast-track: reference packaging flows + ATE recipes + DFT support at Sanand/Jagiroad for DLI grantees.

4) Modernize SCL as a “Trusted Foundry & Test Hub” (0–36 months)

Push the SCL upgrade through Cabinet; formalize dual role: strategic runs (space/defence) and academic/startup protos with subsidized lots and secure design rules. Business Today

5) Build Supplier Parks Next to the Cleanrooms (6–48 months)

Co-locate tool spares depots, CMP slurry/pads, photoresist/blanks, specialty gases; use ISM/SPECS to backfill missing links. Require top suppliers to keep field service teams and turn-around SLAs onshore. Press Information Bureau

6) Talent at Scale (Now–60 months)

Fast-track SEMICON education alliances (cleanroom apprenticeships; 12–18 month diplomas). Leverage AMAT’s Bengaluru center and Lam’s 60k-engineer program; set targets for process/yield/tool engineers per site and tie subsidies to hiring/training delivery. The Economic Times ,techovedas

7) Finance & Risk-Sharing

Ten-year depreciation & stable tariffs for fab inputs; FX hedging support for tool imports.
A Sovereign Co-Investment Window (convertible preference) for yield-ramp phases, paid back via success fees once >90% yield achieved at volume.

Indigenous Design & “Designed-in-India” Chips

Processors: DIR-V aligns academia and startups around open RISC-V—with SHAKTI (IIT-M) and VEGA (C-DAC) as foundational IP. Press Information Bureau ,vegaprocessors.in
Commercial MCUs & SoCs: Mindgrove launched India’s first indigenously designed commercial high-perf MCU (RISC-V), while InCore offers configurable cores and an automated SoC generator to compress design cycles. Design Reuse EE Times
Wireless/Networking: Signalchip built 4G/5G baseband + NavIC; Tejas Networks’ acquisition of Saankhya Labs shows IP consolidation in software-defined radios and backhaul. signalchip.com ,tejasnetworks.com
Pipeline: Under DLI, 23 design projects have central backing—networking SoCs, energy meters, surveillance, microprocessor IPs—supported by national EDA and MPW access (C2S). Press Information Bureau

What Success Looks Like by 2029–2031

Manufacturing: One high-volume mature-node fab at yield; multiple OSATs with advanced packages (FC-BGA, SiP); growing SiC/GaN footprints for EVs and power. Design Reuse
Design: 200+ annual tape-outs across MCU, connectivity, power management, and domain-specific accelerators; recurring Designed-in-India wins in automotive, industrial, and telecom. Press Information Bureau
Suppliers: A half-dozen major tool/material OEMs with India depots, labs, and training centers (AMAT, TEL and others already moving). The Economic Times+1
Talent: 60k–100k fab/OSAT/process/ATE professionals trained through industry-backed programs; research pathways anchored by SCL and university nanofabs. techovedas

Bottom Line

India finally has simultaneous momentum in fabs (Dholera), OSATs (Sanand, Assam), design (DLI/DIR-V), and workforce (C2S + OEM partnerships). The policy task now is execution: guaranteed early demand, supplier co-location, MPW cadence, trusted-foundry capacity, and accelerated talent pipelines. Do these five things well, and India shifts from being a design outpost to a full-stack semiconductor nation within one political term.

Parasuram Thampi