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While India is building domestic capabilities in chip fabrication, packaging and testing, execution remains its biggest challenge due to heavy dependence on imported equipment and supply chain gaps, according to a report by Equirus Securities.
The report said India's semiconductor strategy combines successful elements from leading Asian chip-making nations rather than creating a new model. It said India has avoided the Chinese approach while adopting government-backed research and development from Taiwan, FDI-led manufacturing from Malaysia, domestic champions from South Korea, and capital discipline from Singapore. According to the report, India's main challenge is execution, not strategy. It said the country must build a skilled workforce, strengthen domestic supply chains and achieve globally competitive quality standards within a short period. The report said India is focusing on areas where it has a competitive advantage, supported by nearly three lakh chip designers, accounting for about one-fifth of the global talent pool. It added that the country's strategy is centred on OSAT and mature nodes between 28nm and 110nm, which account for a large share of global wafer capacity and are widely used in automotive, industrial and consumer applications. "Demand-led import substitution underpins the case, with chip consumption set to more than double to about USD 155 billion by CY31," the report said. However, it noted that India will continue to import more than 90 per cent of its semiconductor equipment, along with most specialty chemicals and electronic-grade gases. The report said that while India has a strong base of chip designers, it lacks enough process engineers, metrology specialists, yield engineers and cleanroom technicians needed for manufacturing. It said the target of creating 85,000 industry-ready engineers by CY27 is ambitious but achievable, citing Micron's Sanand ATMP facility, which became operational with around 2,000 trained workers within three years of construction. The report said India's semiconductor policy is among its most credible industrial initiatives but highlighted several gaps. These include the need for higher design incentives, the absence of a strong equipment and materials ecosystem, and limited prospects for sub-28nm manufacturing in the near future. It added that Dholera's planned 28nm fabrication facility will remain a mature-node project by global standards even after reaching scale. The report identified dependence on imports for upstream equipment and materials as the biggest weakness in India's semiconductor ambitions. It estimated that the country will import more than 90 per cent of chip-making equipment and 85-90 per cent of specialty chemicals and electronic-grade gases. (ANI)
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