GD Topic - Making India a Semiconductor Powerhouse: The SEMICON India Programme

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Senior Executive - Editorial

Updated on Sep 26, 2025 14:49 IST

Read this article for a Group Discussion on India’s Initiatives to be a Semiconductor Powerhouse and SEMICON India Programme.

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Table of contents

What is Semiconductor?
Need for Semiconductor Production in India
Semiconductor in India
Government Initiatives to Promote Semiconductor Production in India
India’s Position for Semiconductors in the World
Top Group Discussion Topics for MBA GD Round

What is Semiconductor?

As we have all studied in basic science, there are conductors from which current can flow easily, and insulators that resist flow of current. Now, between these materials are semiconductors. They are materials like silicon or germanium which can regulate flow of electricity by adding small amounts of impurities called dopants, including phosphorus, antimony, indium, gallium, etc., through a process called doping. These semiconductors are base of Semiconductor Chips, which are tiny yet powerful electronic circuits found in smartphones, televisions, refrigerators, air conditioners, national security systems such as drones, missiles and radars, and in advanced technologies like artificial intelligence, machine learning and blockchain.

Types of Chips

The semiconductor chips can be classified based on current flow, functionality, and technology level.

Based on Flow of Current

Analog Chips: The chips in which current flows continuously. For example, chips in sensors.
Digital Chips: The chips in which current flows in binary form. Most of the chips we use in our daily life are digital chips.

Based on Functionality

GPU Chips: The chips used in video editing, video rendering, and simulation.
Memory Chips: The chips used for data storage.
ASIC: These are supplication-specific integrated chips, like those used in barcodes for payment.
System on Chip (SOC): The multi-functional chips, like chips used in smartphones.

Based on Technology Level

Legacy Chips: The chips with more than 28 nanometers. These are suitable for standard tasks.
Advanced CEC: The chips with less than 28 nanometers. These chips are more powerful and efficient.

The power of semiconductor chips can be determined by number of transistors embedded in a single chip. A semiconductor chip with more transistors is more powerful, will consume less power and work more efficiently. The size of transistors embedded in chips is Nanometer.

For example, iPhone 16 uses advanced A18 Pro chips. These chips have three nanometers, which means that the size of transistors used in this chip is less than three nanometers. Therefore, these chips contain more than 20 billion transistors.

Specialization in Semiconductor Production

Over time, the semiconductor chip manufacturing process has become highly specialized. It has led to the development of different types of companies. Some of these are as follows:

Integrated Device Manufacturers or IDMs: These companies manage the entire process in-house, from design to production to packaging, i.e., ATMP stage of semiconductors. For example, Intel, Samsung, and Micron.
Fabless Companies: The companies that focus solely on chip design and rely on other companies for manufacturing are known as the Fabless Companies. For example, NVIDIA, Broadcom, and Qualcomm.
Engineering Design Automation or EDA Companies: The design companies (fabless companies) take help from some specialized companies known as the EDA Companies for specialized software to create chip designs. For example, Cadence and Synopsys.
Fabrication Plants or Foundries: These manufacturing plants or facilities produce chips based on the designs given by fabless companies. Taiwan Semiconductor Manufacturing Company or TSMC is the largest foundry globally. Some of the other foundries include Global Foundry in US, PSMC and UMC in Taiwan, and SMIC in China.
Outsourced Semiconductor Assembly and Test or OSAT Providers: Once the foundries complete the production process, the next stage of the supply chain; i.e., the ATMP stage is completed by the OSATs. For example, ASE and Amkor.

From this, we can see that the production of semiconductors is a highly coordinated and global process. Each stage takes place in different parts of the world. For example, the designing of semiconductor chips is mostly done in western countries, manufacturing and ATMP are concentrated in Southeast Asia (Taiwan, Vietnam, Malaysia, Japan, and South Korea), and equipment and materials are taken from European Countries (Photolithography machines from ASML, specialized glass from Germany, raw materials from Japan and Korea, and sand from Australia).

Need for Semiconductor Production in India

From the above discussion, we can see that the production of semiconductor chips is a specialized function, which raises a question; Why does India want to venture into semiconductor production? Here are some of the reasons behind the Indian Government’s attempt to give rise to semiconductor production in India:

Reduce Dependence on Imports: 95% of the semiconductor chips used in electronic devices in India are imported. The Indian government aims to achieve over $500 billion from the electronics market by 2030 which is impossible without creating in-house semiconductor production facilities.
Job Creation: The semiconductor supply chain consists of three major stages: design, manufacturing, and ATMP (Assembly, Testing, Marking, and Packaging). Among these stages, the ATMP stage has low entry barriers. It also requires minimal skills, making it an excellent opportunity for India to attract companies to come here and start the ATMP function.
Less Migration: Indian engineers account for over 20% of the global semiconductor design workforce, which shows India’s strength in design expertise. Hence, by opening companies in India, Indian engineers will not migrate to other countries for jobs.
Strategic Importance: Semiconductors are important for India’s technological and economic progress. By establishing its semiconductor production, India can safeguard its technological future and reduce dependency on external sources.

Semiconductor in India

It is not the first time that the Indian government has attempted to enter into the semiconductor industry. In 1976, a Semiconductor Complex Lab (SCL) was set up in Mohali. The technology used for producing semiconductor chips at that time was just one step behind the most advanced semiconductor chips in the world. However, India’s attempt to progress in this industry failed when a fire broke out in the Semiconductor Complex Lab in 1989. After that incident, the Indian government has now started to rebuild what was lost back then through different initiatives to make India a global hub of the semiconductor industry.

Government Initiatives to Promote Semiconductor Production in India

After recognizing the importance of the semiconductor industry, Indian Prime Minister Narendra Modi has launched initiatives to take the country’s semiconductor sector forward and make it a semiconductor powerhouse of the world. One such initiative is the SEMICON India Programme.

SEMICON India Programme

The SEMICON India Programme is a strategic initiative launched by the government of India to establish the country as an international hub for semiconductor manufacturing, design, and innovation. The vision of this programme is to reduce dependency on imports and place India as a major player in the global semiconductor supply chain. To fulfill the goals, this programme is backed by various investments and policies.

Highlights of the SEMICON India Programme:

Financial Support and Investments: The SEMICON India Programme is supported by over $10 billion fund to develop India’s semiconductor ecosystem. This fund promises up to 50% of the project cost for semiconductor manufacturing units and related infrastructure in India.
India Semiconductor Mission (ISM) is the nodal agency of the SEMICON India Programme. It provides targeted incentives across all stages of the Semiconductor Production Supply Chain, including the semiconductor Fabrication Plant, Display Fabrication Plant, ATMP or OSAT Facility, and Design Semiconductor Circuit.
Incentive Schemes: ISM provides different incentives at different stages or functions of the manufacturing process of semiconductor.
- Design-Linked Incentives offers financial support to encourage companies specializing in chip design.
- Production-Link Incentives focus on increasing the manufacturing of electronics and semiconductor.
- Electronic Development Fund is offered under the SEMICON India Programme. It funds the research, development, and innovation process of the semiconductor industry.
Global Partnership: The Government of India is partnering with Japan, South Korea, the United States, and Singapore. The partnership is made to strengthen the semiconductor supply chain. This will help India leverage diplomatic ties to attract investment and expertise in semiconductor manufacturing.

India’s Position for Semiconductors in the World

The Indian Government is taking all possible initiatives at national, international, regional, and group levels to make India a hub for semiconductor production, and these initiatives are not going in vain. In this competitive global environment, India is making significant improvements in this industry. Besides, many companies like Micron, Global Foundry, Tower Group, and PSMC are either setting up their plants individually or by partnering with domestic partners. For example, TATA, Adani, CG Power, and L&T are collaborating to make India a semiconductor powerhouse. The Indian semiconductor market is projected to reach $7.69 billion in 2024 and achieve $80.3 billion by 2028 at a CAGR of 17.10%.

India is not the only country incentivizing semiconductor production. Countries around the globe are implementing strategies to dominate this sector.

The US introduced the CHIPS Act in 2022. It allocated over $50 billion to reinforce its semiconductor industry.
South Korea launched the K-Chips Act to provide substantial tax breaks to semiconductor companies.
Japan offers incentives of more than $2 billion for its semiconductor industry.
Taiwan is the world’s largest chipmaker and holds 44% of global market share. It continuously supports its semiconductor ecosystem to remain at the top.

These four countries have also formed the Chip 4 Alliance. They aim to secure semiconductor supply chains and mitigate risks, especially concerns related to geopolitical tensions with China.