India’s Semiconductor Push: From Smartphones to Chip Manufacturing and a Complete Silicon Ecosystem
India’s electronics industry has undergone a remarkable transformation over the past decade. The country has moved from relying heavily on imported electronic products to becoming a major manufacturing and export base, particularly for smartphones. The next stage of this journey is far more ambitious: building a semiconductor ecosystem capable of supporting chip design, manufacturing, packaging, testing, equipment, research and skilled talent.
The developments highlighted around SEMICON India 2026 show that India’s semiconductor ambitions are increasingly moving from policy announcements toward actual industrial activity. The government’s strategy is no longer focused only on constructing semiconductor fabrication plants, commonly known as fabs. Instead, it is attempting to develop the many businesses and capabilities required around those facilities.
This shift matters because semiconductors are the foundation of modern technology. Smartphones, automobiles, computers, telecommunications equipment, medical devices, industrial machinery and artificial intelligence systems all depend on chips.
From Electronics Assembly to Semiconductor Manufacturing
India’s electronics manufacturing sector has expanded dramatically. Government data cited by The Economic Times shows that electronics production increased from approximately ₹1.9 lakh crore in 2014-15 to ₹13.11 lakh crore in 2025-26. Electronics exports also climbed from about ₹38,000 crore to ₹4.24 lakh crore during the same period.
Mobile phones have been a particularly important part of this transformation.
Mobile manufacturing rose from around ₹18,000 crore in 2014-15 to ₹6.27 lakh crore in 2025-26. During the same period, mobile exports increased from approximately ₹1,500 crore to ₹2.59 lakh crore.
India now manufactures approximately 99.2% of the mobile phones used domestically, according to government figures cited in the report. Smartphones have also become an important export product.
This manufacturing base provides India with an important foundation for moving further upstream into components and semiconductors.
Why Semiconductors Are So Important
Chips Are at the Heart of Modern Technology
A semiconductor chip may be tiny, but it performs functions that are essential to almost every modern electronic system.
Processors perform calculations, memory chips store information, sensors collect data and specialised chips control communications, power management and other functions.
The rapid growth of artificial intelligence is making semiconductors even more important. AI systems require large amounts of computing power, while increasingly sophisticated applications depend on high-performance memory and storage.
Consequently, countries around the world are trying to strengthen their semiconductor supply chains.
Supply-Chain Resilience Has Become a Strategic Priority
The semiconductor industry is highly globalised. Chip design, manufacturing, equipment production, packaging and testing may take place in different countries.
Disruptions in one part of the chain can therefore affect manufacturers elsewhere.
India’s semiconductor programme is intended partly to develop domestic capabilities while also integrating the country into international supply chains.
The Scale of India’s Semiconductor Investment
India launched the Semicon India Programme with an initial outlay of ₹76,000 crore.
The programme was designed to support several parts of the semiconductor value chain rather than concentrating solely on fabrication plants.
In July 2026, the Union Cabinet approved the second phase, Semicon 2.0, with an outlay of ₹1,27,500 crore. The programme covers six broad areas: chip design, semiconductor equipment and materials, fabrication facilities, advanced packaging, research and development, and talent development.
Together, these initiatives represent a substantial public-policy commitment to developing the semiconductor sector.
Under the first phase, 12 semiconductor projects had been approved across six states, with committed investment exceeding ₹1.64 lakh crore. Three projects had already entered commercial production, according to the information reported by The Economic Times.
That transition from approvals to commercial output is significant because semiconductor projects require large amounts of capital, specialised infrastructure and long development periods.
Building More Than Just Fabs
Why a Fab Alone Is Not Enough
A semiconductor fabrication plant is only one component of a much larger industrial ecosystem.
Before a chip reaches a fab, it must be designed and tested. Manufacturing requires specialised machinery, chemicals, gases and materials. Once fabrication is completed, chips need to be packaged and tested before they can be incorporated into electronic products.
This means a successful semiconductor industry requires multiple interconnected businesses.
India’s current strategy therefore includes:
- Chip design
- Semiconductor fabrication
- Assembly and testing
- Advanced packaging
- Semiconductor equipment
- Materials and chemicals
- Research and development
- Engineering and technical talent
- Electronics manufacturing
Developing these layers simultaneously could help create a more complete domestic ecosystem.
The Growing Role of Chip Design
India already has significant engineering and software capabilities, and multinational semiconductor companies have maintained research and design operations in the country.
The next objective is to encourage more domestic chip-design companies and startups.
According to information announced at SEMICON India 2026, Semicon 2.0 aims to support at least 200 startups and companies involved in chip design. The programme’s first phase had already involved 105 startups, with around 20 receiving venture capital funding worth approximately ₹800 crore, according to the electronics minister cited by The Economic Times.
A stronger design ecosystem could allow Indian companies to participate in the semiconductor value chain even when they are not operating large fabrication facilities.
Advanced Packaging Is Becoming Increasingly Important
Chip packaging is another critical part of semiconductor manufacturing.
After a semiconductor wafer is manufactured, individual chips must be packaged and tested. Packaging protects the chip and allows it to connect with other components.
Modern technologies are also making advanced packaging increasingly important for high-performance computing and AI applications.
India’s semiconductor programme includes support for advanced packaging facilities, including ATMP and OSAT operations. The second phase also includes advanced packaging as one of its central pillars.
Developing expertise in this area could help India establish another important link between chip fabrication and electronics manufacturing.
Talent Could Determine the Next Phase
Semiconductor manufacturing requires a very different workforce from conventional electronics assembly.
Factories need engineers, technicians, clean-room specialists, equipment operators, process experts and researchers.
India’s first semiconductor programme originally targeted the training of 85,000 design engineers over a decade. According to the government information reported at SEMICON India 2026, that target was reached in four years. Semicon 2.0 now aims to develop another 1 lakh semiconductor technicians and industry-ready workers.
This focus is important because factories cannot operate effectively simply by installing expensive equipment. They require trained people capable of maintaining sophisticated production processes.
Global Companies Are Expanding Their India Presence
The semiconductor ecosystem is also attracting commitments from international companies.
Applied Materials announced a proposed US$5 billion investment over the next decade under its India Vision 2035 initiative. The plan focuses on research and development, ecosystem development and future talent. The company also announced plans for a 140-acre advanced semiconductor research park.
Meanwhile, Micron has already begun commercial production at its Sanand facility in Gujarat and plans to significantly scale up assembly and testing operations. The company says its Indian operations combine design activities in Bengaluru and Hyderabad with assembly operations in Gujarat.
These developments demonstrate that India’s semiconductor ambitions involve both domestic companies and multinational corporations.
What This Could Mean for India
More High-Skill Employment
A broader semiconductor industry could create opportunities for engineers, technicians, researchers, manufacturing specialists and supply-chain professionals.
The effects may extend beyond semiconductor factories because equipment suppliers, materials companies, logistics providers and industrial-service businesses are also required.
Stronger Electronics Manufacturing
Semiconductor availability within a growing domestic ecosystem could complement India’s existing electronics manufacturing capabilities.
Companies producing smartphones, automobiles, telecommunications equipment and other electronics could potentially benefit from a stronger local component ecosystem over time.
Greater Participation in Global Supply Chains
India is also seeking a larger role in global semiconductor supply chains.
The development of manufacturing, packaging, design and supporting industries could make the country more integrated into international technology production networks.
However, building a globally competitive semiconductor industry will take time. Semiconductor manufacturing is technologically complex and capital intensive, and competition from established semiconductor hubs remains substantial.
Challenges Ahead
India’s progress does not mean that the semiconductor journey is complete.
The country will need reliable infrastructure, specialised utilities, advanced equipment, consistent supply of materials, highly trained workers and sustained investment.
Research and development will also be important. Semiconductor technology changes quickly, meaning companies and institutions must continually develop new processes and products.
Another challenge is creating enough domestic demand and export opportunities to support large-scale investment over the long term.
The success of the semiconductor strategy will therefore depend not only on the number of factories built but also on whether India can develop a connected ecosystem around them.
Why SEMICON India 2026 Matters
SEMICON India 2026 represents a broader shift in the country's semiconductor narrative.
The focus is increasingly moving from announcing projects to discussing production, supply chains, workforce development, research and commercial integration.
The event's theme, “Silicon to Systems: Building the Ecosystem,” captures this broader approach.
The goal is not simply to manufacture individual chips. It is to create an ecosystem capable of connecting chip design, manufacturing, packaging, equipment, materials, research and electronics production.
If these components develop together, India could strengthen its position in the global technology supply chain.
Frequently Asked Questions
What is India’s semiconductor mission?
India’s semiconductor programme is a government initiative designed to develop domestic capabilities across chip design, fabrication, packaging, equipment, materials, research and talent.
How much has India allocated under Semicon 2.0?
The Union Cabinet approved Semicon 2.0 in July 2026 with an outlay of ₹1,27,500 crore.
How many semiconductor projects have been approved?
Twelve semiconductor projects had been approved under the first phase, covering different parts of the semiconductor value chain.
Has semiconductor production started in India?
Yes. According to information reported at SEMICON India 2026, three projects under the first phase had entered commercial production, including facilities associated with Micron, Kaynes and CG Semi.
Why is semiconductor manufacturing important for India?
Semiconductors are essential for smartphones, computers, automobiles, telecommunications, industrial equipment and AI systems. Developing domestic capabilities could strengthen India’s electronics ecosystem and its participation in global supply chains.
Conclusion
India’s semiconductor journey is entering an important stage. The country already has a rapidly expanding electronics manufacturing base, particularly in smartphones. The next challenge is to build the technological layers that sit behind those products.
Government funding under Semicon India and Semicon 2.0 is supporting this broader ambition, while companies are investing in fabrication, assembly, testing, research and supply-chain capabilities.
The most important development is the widening definition of what India’s semiconductor industry should be. It is no longer just about building fabs. Chip design, advanced packaging, equipment, materials, research and skilled workers are all becoming part of the strategy.
The transition will not happen overnight. Semiconductor manufacturing requires sustained investment, technical expertise and global competitiveness. But the emergence of commercial production and expanding private-sector commitments indicates that India is moving into a more execution-focused phase.
For India, the long-term opportunity extends beyond making chips. It is about creating an ecosystem capable of connecting silicon to systems and positioning the country more deeply within the global technology economy.