Can India catch up with the US, Taiwan and China in the global chip race?

By Admin

19 Dec, 2025

As the global race for semiconductor dominance intensifies, India is positioning itself as an alternative manufacturing hub for companies seeking to diversify beyond China. With strong government backing, new partnerships, and rising domestic demand, the question remains: can India realistically catch up with leaders like the United States, Taiwan, and China in the global chip ecosystem?

India’s semiconductor push explained

In October, a small electronics manufacturer in Gujarat shipped its first batch of chip modules to a client in California   a modest but symbolic milestone. Kaynes Semicon, working with Japanese and Malaysian technology partners, assembled the chips at a new facility backed by incentives under Prime Minister Narendra Modi’s $10 billion semiconductor programme announced in 2021.

The government’s broader goal is to position India as an additional global manufacturing hub for companies looking to reduce dependence on China. While progress has been slow, recent developments suggest growing momentum.

A pivotal step is India’s first commercial foundry for mature chips, currently under construction in Gujarat. The $11 billion project is supported by technology transfer from Taiwan and has onboarded Intel as a potential customer. If completed as planned, it could mark a turning point for India’s long-standing ambition to enter semiconductor manufacturing at scale.

Where India fits in the global chip chain

Semiconductor production is highly specialised. The US dominates chip design, Taiwan leads fabrication, and China has emerged as a major force in assembly, testing and packaging (ATP).

India has traditionally been strong in chip design, with Indian engineers accounting for nearly 20 percent of the global design workforce. However, converting this strength into manufacturing capability has been the real challenge.

The upcoming Gujarat foundry is a collaboration between Tata Group and Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC). Approved for a 50 percent government subsidy, the plant is expected to produce chips ranging from 28nm to 110nm   known as mature chips   which are widely used in automobiles, industrial equipment, and consumer electronics.

While these are not cutting-edge chips like 7nm or 3nm used in AI and high-performance computing, they account for the bulk of global demand and offer India a more achievable entry point.

Why mature chips are India’s gateway

More than half of India’s $10 billion incentive package is directed toward the Tata-PSMC foundry, with the remainder supporting nine ATP projects across the country. These include large investments by Micron Technology in Gujarat and Tata Group in Assam, as well as smaller projects backed by global players such as Foxconn, Renesas, and Stars Microelectronics.

ATP facilities require lower capital investment and carry less technological risk compared to advanced fabs. This makes them an easier starting point for India, especially as global demand for packaged chips continues to grow.

Although most projects are running behind schedule, there have been notable early successes. Kaynes Semicon has already exported sample modules, and CG Semi, part of the Murugappa Group, is entering commercial production soon   both rare firsts for India.

Meeting domestic demand comes first

India’s semiconductor strategy is driven as much by necessity as ambition. Domestic chip demand is expected to double from $50 billion today to $100 billion by 2030, while global demand could reach $1 trillion.

India’s chip imports rose 36 percent in 2024 to nearly $24 billion and continue to grow this year. China remains the largest supplier, followed by Hong Kong, South Korea, Taiwan, and Singapore.

Even producing mature chips locally can significantly improve India’s trade balance and strengthen industries that rely heavily on semiconductors, from automobiles to electronics manufacturing. The aim is not to replace China but to capture incremental global and domestic demand.

Challenges that could slow India down

Despite unprecedented policy support, India’s incentives remain far smaller than those offered by China and the US under the CHIPS Act. To compete meaningfully, especially beyond 28nm technology, India will need continued financial backing and strong foreign partnerships.

Infrastructure reliability, regulatory efficiency, power availability, and customs policies remain key bottlenecks. There is also growing concern that limited incentives for multinational design firms could push R&D investments toward competing markets like China and Malaysia.

Geopolitical uncertainty adds another layer of complexity. While India’s chip facilities plan to export to the US, Japan, and Taiwan, global trade tensions and tariff threats could affect long-term partnerships.

Can India realistically catch up?

India is unlikely to rival Taiwan or the US in cutting-edge chip fabrication in the near future. Advanced nodes like 7nm and 3nm require extraordinary capital, expertise, and ecosystem maturity.

However, India does not need to lead the global chip race to be relevant. By focusing on mature chips, ATP capabilities, and domestic demand, India can secure a meaningful position in global supply chains.

The progress of projects like the Tata-PSMC foundry signals stronger political will and private-sector coordination than ever before. If policies remain consistent and incentives competitive, India can evolve from a design powerhouse into a reliable manufacturing partner   not a leader yet, but a serious contender in the global semiconductor landscape.