India’s Semiconductor Push: Between Hype and Strategy

The semiconductor industry is the backbone of modern technology, powering everything from smartphones to military systems. In an era of geopolitical fractures and supply chain fragility, nations are scrambling to secure their semiconductor futures. India, late to the game but ambitious in its aspirations, has launched the India Semiconductor Mission (ISM) with a $10 billion incentive package and bold claims of becoming a global chip hub by 2047.

The vision is compelling—but is it credible?

Between the hype of “India’s semiconductor moment” and the sobering realities of high-tech manufacturing, there lies a nuanced truth: India has a genuine opportunity, but only if it confronts its structural weaknesses with unflinching honesty.

Geopolitics: The Tailwind India Can’t Ignore

The semiconductor supply chain is no longer just about economics—it’s about national security. The U.S.-China tech war, Taiwan’s precarious position, and post-pandemic supply shocks have forced a global rethink. Companies want diversification, and India, with its neutral geopolitical stance, skilled workforce, and vast domestic market, is a logical candidate.

Consider the investments already flowing in:

1   Tata-PSMC’s $11 billion fab in Gujarat (India’s first major fabrication plant).
2   Micron’s $2.75 billion packaging and testing facility.
3   Lam Research’s $1.15 billion investment in chip-making tools.
4   Foxconn’s interest in setting up semiconductor assembly units.

These moves aren’t accidental. Global firms are hedging against China risk, and India is a beneficiary. But geopolitics alone won’t build a semiconductor ecosystem.

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The Hard Realities: Where India Lags

1. No Advanced Fabs (Yet)

India has zero cutting-edge fabrication plants. The Tata-PSMC plant will start with mature nodes (65nm to 28nm), not the bleeding-edge 3nm or 5nm chips that power iPhones and AI data centers. Taiwan (TSMC), South Korea (Samsung), and the U.S. (Intel) dominate advanced manufacturing. India is decades behind—but that’s not necessarily a bad thing.

Realist Take:

  Start with mature nodes (used in cars, industrial tech, defense).
  Master packaging and testing (where Micron’s investment is strategic).
  Leverage design strengths (Qualcomm, Intel, and Nvidia already have R&D centers in India).

2. Infrastructure: The Silent Killer

Semiconductor fabs need uninterrupted power, ultra-pure water, and precision logistics. A single voltage fluctuation can ruin millions of dollars’ worth of chips.

COMPANY NAME (INVESTOR)	COUNTRY OF ORIGIN	INVESTMENT AMOUNT (USD BILLION)	TYPE OF INVESTMENT	LOCATION IN INDIA
Tata Electronics	India	11	Chip Fabrication	Gujarat
TSMC	Taiwan	Part of Tata’s 11	Chip Fabrication	Gujarat
Lam Research	USA	1.151	Manufacturing Tools	Karnataka
Micron Technology	USA	2.75	Packaging and Testing	Gujarat
Tower Semiconductor	Israel	10	Wafer Fabrication	Karnataka
Adani Group	India	Part of Tower’s 10	Wafer Fabrication	Karnataka
Renesas Electronics	Japan	~0.91 (76 Billion INR)	Packaging and Testing	TBD
CG Power	India	Part of Renesas’ ~0.91	Packaging and Testing	TBD
Stars Microelectronics	Thailand	Part of Renesas’ ~0.91	Packaging and Testing	TBD
Applied Materials	USA	0.4	Engineering Center (R&D)	Karnataka
Over 100 Semiconductor Startups	India	—	Design, Supply Chain Solutions	Various

India’s Achilles’ Heel:

  Erratic power supply (even in industrial zones).
  Water scarcity (a fab consumes millions of liters daily).
  Weak chemical supply chains (critical for wafer processing).

Solution:

  Dedicated semiconductor industrial parks with sovereign-grade infrastructure.
  Pre-negotiated utility guarantees (like China’s SEZs in the 1990s).

3. Talent: The Missing Middle

India produces world-class chip designers (thanks to its IT ecosystem) but lacks hands-on fab engineers. Running a semiconductor plant requires photolithography experts, wafer specialists, and process chemists—skills India doesn’t teach at scale.

Fix:

  Partnerships with TSMC, Intel, or GlobalFoundries for workforce training.
  Mandate semiconductor coursework in IITs/NITs (like Taiwan’s NCTU model).

4. Supply Chain Dependencies

Even if India builds fabs, it imports 90% of raw materials—silicon wafers, photoresists, rare gases. Japan, South Korea, and Germany control these supply chains.

Country	Primary Motivations	Key Strategic Focus Areas	Main Policy Instruments	Current Strengths
India	Economic growth, national security, and self-reliance	Attracting foreign investment, building manufacturing (initially mature nodes, ATP), leveraging design strengths, domestic market	Government incentives, international collaborations	Strong in chip design, large domestic market
China	Semiconductor self-sufficiency, global leadership	Advanced manufacturing, displacing foreign-made chips	Massive state subsidies, industrial policies	Large domestic market, growing manufacturing base
USA	National security, economic competitiveness	Incentivizing domestic manufacturing and R&D, restricting China	CHIPS Act (incentives, grants), export controls	Leadership in chip design, strong R&D ecosystem
Taiwan	Maintaining global leadership in manufacturing	Advanced manufacturing (foundries)	Strong ecosystem around TSMC	Dominant in advanced semiconductor manufacturing
South Korea	Maintaining global leadership in manufacturing	Memory chips, advanced manufacturing	Strong support for major conglomerates (e.g., Samsung)	Leader in memory chip manufacturing
Singapore	Hub with complete supply chain	Foundry manufacturing, packaging, and testing	Business-friendly policies, infrastructure	Complete supply chain, foundry manufacturing
Malaysia	Expanding beyond packaging and testing	Manufacturing, design	Infrastructure investment, talent development	Strong in packaging and testing
European Union	Technological sovereignty, reducing dependence	Advanced chip research, design, and manufacturing	European Chips Act (incentives, research funding)	Strong in specific niches (e.g., automotive chips)

Strategic Move:

  Joint ventures with Japanese chemical firms (like JSR or Shin-Etsu).
  Stockpile critical materials (as China does with rare earths).

The Strategic Playbook: What India Must Do

1. Focus on Mature Nodes First

Not every chip needs to be 3nm. Automotive, industrial, and defense chips use older, stable nodes (28 nm- 65 nm). India should dominate this segment before chasing cutting-edge fabs.

2. Win in Packaging & Testing

40% of a chip’s cost comes after fabrication—packaging, testing, and assembly. India can be a global hub for back-end processes (like Malaysia is today).

3. Leverage Design Leadership

20% of global chip designers are Indian. ISM should incentivize homegrown design firms (like China’s HiSilicon) to create demand for local fabs.

4. Forge Tech Alliances

  U.S. (CHIPS Act): Partner on R&D, attract American equipment makers.
  Japan: Secure materials and precision machinery.
  EU (European Chips Act): Collaborate on automotive and industrial chips.

5. Avoid China’s Mistakes

China spent $150 billion on semiconductors but still lags in advanced chips due to IP theft sanctions and inefficiency. India must play by global rules to avoid export controls.

Conclusions

India’s semiconductor push is more than just geopolitics—it’s about economic sovereignty, job creation, and tech leadership. But ambition must be tempered with ruthless execution.

  Short-term (2024-30): Build packaging/testing dominance, mature-node fabs.
  Medium-term (2030-40): Move to advanced nodes, secure supply chains.
  Long-term (2040+): Compete in cutting-edge manufacturing.

The India Semiconductor Mission is a start—but without infrastructure, talent, and supply chain fixes, it risks becoming another “Make in India” story with more headlines than high-tech exports.

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The world needs a trusted, neutral semiconductor player. India has the chance to be just that—if it plays its cards right.

frequently asked questions (FAQs)

What is the primary mistake companies make when setting up a GCC in India?

The most common mistake is viewing the GCC solely as a cost-saving measure, which limits its potential for strategic value creation and innovation.

Why is cultural integration more complex than just ``sensitivity training``?

Cultural differences affect fundamental aspects like communication, decision-making, hierarchy, and feedback. Ignoring these nuances can lead to misinterpretations, trust issues, and inefficient collaboration between global and Indian teams.

How does a ``set and forget`` governance model impact a GCC?

It leads to misalignment, unclear mandates, ineffective decision-making, and a lack of integration with global business units, hindering the GCC’s ability to evolve and deliver strategic value.

Why is empowering local Indian leadership so crucial for GCC success?

Strong local leadership drives innovation, enables faster decision-making, fosters a sense of ownership, reduces attrition by providing career paths, and ensures the GCC can effectively engage with the local ecosystem.

What is an ``Employee Value Proposition`` (EVP) for a GCC?

It’s more than just salary; it’s the unique combination of meaningful work, career growth opportunities, access to cutting-edge technologies, a positive culture, and global impact that attracts and retains top talent in a competitive market

Why is engaging with India's external ecosystem important for GCCs?

It allows GCCs to tap into new talent pipelines (academia), source innovative solutions (startups), gain market insights (industry bodies), and enhance their employer brand, preventing them from operating in a silo.

How do successful GCCs measure their performance beyond just cost savings?

Leading GCCs focus on outcome-based metrics such as value delivered to business units, quality of output, innovation generated, employee retention, and overall contribution to global strategic objectives.

What role do top consulting firms like BCG and Bain play in GCC strategy?

They provide frameworks, strategic advice, and best practices for GCC setup, expansion, and optimization, helping companies define mandates, design operating models, manage talent, and ensure long-term value creation.

Can a GCC recover from initial mistakes in its expansion?

Yes, but it requires a proactive and strategic intervention, often involving a re-evaluation of its mandate, governance, talent strategy, and a renewed commitment from global leadership to invest in its strategic evolution.

10.

What is the future outlook for GCCs in India?

The future is bright, with GCCs continuing to move up the value chain, becoming even more strategic innovation hubs, focusing on hyper-specialized skills (like AI), and adopting advanced hybrid talent models to drive global business transformation.

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Aditi

Aditi, with a strong background in forensic science and biotechnology, brings an innovative scientific perspective to her work. Her expertise spans research, analytics, and strategic advisory in consulting and GCC environments. She has published numerous research papers and articles. A versatile writer in both technical and creative domains, Aditi excels at translating complex subjects into compelling insights. Which she aligns seamlessly with consulting, advisory domain, and GCC operations. Her ability to bridge science, business, and storytelling positions her as a strategic thinker who can drive data-informed decision-making.