India Accelerates Domestic Semiconductor Assembly and Testing to Reduce Supply Risks
Updated (3 articles)
Robust Design Talent Offsets Limited Manufacturing Capacity India now hosts roughly 20 % of the world’s semiconductor engineers, with firms like Tejas Networks designing telecom chips and major global companies maintaining large design centers in the country [1]. Despite this talent pool, most Indian firms still depend on overseas fabs for production, a vulnerability highlighted by pandemic‑era supply disruptions [1]. The contrast underscores why the government is prioritizing downstream activities rather than full‑scale wafer fabrication at this stage [1].
Government Targets OSAT as First Step Toward Self‑Sufficiency The Ministry of Electronics and Information Technology has identified Outsourced Semiconductor Assembly and Test (OSAT) as the initial focus for building a domestic supply chain [1]. Officials argue that assembly, testing, and packaging require less capital and technical risk than building fabs, allowing quicker market entry [1]. Several OSAT plants are slated to reach mass‑production status within the current year, forming the backbone of the emerging ecosystem [1].
Kaynes Semicon’s Gujarat Facility Begins Commercial Output Kaynes Semicon invested $260 million to construct an OSAT plant in Gujarat, which started shipping packaged and tested chips in November [1]. The facility serves telecom, automotive, and defence sectors but does not yet handle the most advanced AI or data‑centre chips [1]. Its launch marks the first large‑scale domestic assembly line and demonstrates the feasibility of rapid capital deployment in the sector [1].
Cleanroom Construction and Workforce Training Remain Major Hurdles Building semiconductor‑grade cleanrooms proved unprecedented for Indian firms, requiring extensive time and expertise [1]. Training staff to operate sophisticated equipment cannot be compressed into short timelines, extending the development curve for future capabilities [1]. Industry leaders anticipate a significant domestic manufacturing base within a decade, but acknowledge that deep‑tech products will mature slowly as these foundational challenges are addressed [1].
Timeline
2020‑2021 – The COVID‑19 pandemic reveals that global semiconductor manufacturing is overly concentrated, prompting Indian industry leaders to warn of serious supply‑chain risks. Arnob Roy of Tejas Networks says the pandemic “made it clear that semiconductor manufacturing is too concentrated globally, and that concentration carries serious risk.” [1]
2023 – Kaynes Semicon is founded and commits $260 million to build an outsourced semiconductor assembly and test (OSAT) facility in Gujarat, marking one of the first major private investments in India’s chip‑packaging sector. [1]
Sep 2025 – India’s internet user base reaches 101 crore, 4G coverage expands to about 95 % of the population, and 5G rollout continues, underscoring the digital infrastructure that will support a domestic semiconductor ecosystem. Amit Shah cites these milestones while pledging self‑reliance in chips. [2]
Nov 2025 – Kaynes Semicon’s Gujarat OSAT plant begins commercial output, packaging and testing chips for telecom, automotive and defence applications, though it does not yet handle the most advanced AI or data‑centre chips. CEO Raghu Panicker notes the difficulty of building cleanrooms and training staff, saying “you cannot shortcut five years of experience into six months.” [1]
Dec 2025 (early) – Foxconn’s Devanahalli (Karnataka) factory ramps up rapidly, employing roughly 30,000 workers—about 80 % women aged 19‑24—within months, showcasing the state’s capacity to scale manufacturing. Rahul Gandhi highlights the achievement in a Facebook post, calling Karnataka’s ecosystem a model for large‑scale production. [3]
Dec 24 2025 – Union Minister Ashwini Vaishnaw responds to Gandhi’s post, crediting Prime Minister Modi’s Make‑in‑India programme for turning India into a “producer economy” and reinforcing the government’s manufacturing push. [3]
Dec 25 2025 – At the Abhyudaya Madhya Pradesh Growth Summit, Home Minister Amit Shah declares that India will become self‑reliant in semiconductors and will start exporting, even as the country inaugurates industrial projects worth over ₹2 lakh crore across the state. He frames the pledge as part of a rapid expansion of semiconductor manufacturing in Madhya Pradesh. [2]
2025 (throughout the year) – Karnataka IT Minister Priyank Kharge reports a ₹20,000 crore, 300‑acre investment hub that makes the state the leading Electronics System Design and Manufacturing (ESDM) centre, accounting for half of India’s electronic product firms, 40 % of design work and 10 % of output, with more than 80 % of production destined for export, linking the region to Apple’s global supply chain. [3]
2026 (planned) – The Ministry of Electronics and Information Technology targets several OSAT facilities to reach full‑scale mass production within the year, positioning assembly, test and packaging as the first step toward a broader domestic semiconductor base. IESA president Ashok Chandak says “assembly, test and packaging are easier to start than fabs and that is where India is moving first.” [1]
2026‑2036 (future outlook) – Industry analysts project that a “significant semiconductor manufacturing base” will emerge in India over the next ten years, enabling companies like Tejas Networks to source more of their deep‑tech products locally. Arnob Roy forecasts this decade‑long development. [1]