India's Semiconductor Leap: A Journey from Missed Opportunities to Strategic Revival

India has taken a major step toward semiconductor self-reliance with its first domestically produced chip, the Vikram processor, unveiled at Semicon India 2025. Historically, India missed multiple opportunities to establish a chip industry due to bureaucratic delays and policy indecision, losing ground to nations like Taiwan and China. However, with initiatives like the India Semiconductor Mission and significant investments, India is now building a robust ecosystem. This renewed push aims to reduce reliance on imports and position India as a global semiconductor hub.

Semiconductors, often referred to as chips, are tiny yet powerful components that drive the modern digital economy. These fingernail-sized marvels are the foundation of countless technologies, from smartphones and credit cards to AI systems and military equipment. Their significance has elevated the race for semiconductor dominance to a level comparable to the nuclear arms race of the Cold War. Amid the global tug-of-war between the United States and China over chip supremacy, India has embarked on a transformative journey to establish its own chip manufacturing ecosystem.

A Historic Milestone for India

In a momentous development, Prime Minister Narendra Modi recently received India’s first domestically produced semiconductor chip during the Semicon India 2025 inauguration in New Delhi. Union IT Minister Ashwini Vaishnaw presented the Vikram 32-bit processor, developed by the Indian Space Research Organisation's (ISRO) Semiconductor Lab, along with test chips from four approved projects. This milestone, achieved under the 2021-launched India Semiconductor Mission, signals India’s accelerated progress in this critical industry.

Vaishnaw emphasized the rapid strides India has made, stating, “In just 3.5 years, India has positioned itself as a credible player in the semiconductor ecosystem. Today, five semiconductor units are under construction at a swift pace.” The government’s Rs 76,000 crore Production Linked Incentive (PLI) scheme has been pivotal, with Rs 65,000 crore already committed to bolstering domestic chip manufacturing.

A History of Missed Opportunities

While this achievement marks a promising start, India’s semiconductor journey has been plagued by decades of missed chances. Global tech giants, including Fairchild, Texas Instruments, Motorola, and Intel, once expressed serious interest in establishing semiconductor plants in India. However, indecisive policies, bureaucratic delays, and a lack of strategic focus repeatedly turned these opportunities into missed milestones.

In the 1960s, Fairchild proposed setting up a chip manufacturing facility in India. However, socialist economic policies and skepticism toward foreign investment led India to decline the offer. Fairchild chose Malaysia instead, paving the way for Southeast Asia’s emergence as a semiconductor hub.

Similarly, in the 1990s, Texas Instruments proposed a co-invested semiconductor fab in India, contingent on government funding. A lack of urgency and clarity resulted in the project being abandoned. India’s own Semiconductor Complex Limited (SCL), established in the 1980s, also failed to deliver on its potential due to delays, a devastating fire in 1989, and an inability to modernize its technology.

Even Intel co-founder Robert Noyce explored opportunities in India in 1969 but left disillusioned by restrictive policies. Later, in the 2000s, Intel again considered India for a fabrication plant, only to redirect its investment to China and Vietnam due to government sluggishness. Projects like Fab City in Hyderabad and AMD’s proposed $3 billion semiconductor project also collapsed under regulatory and logistical hurdles.

These setbacks, spanning five decades, allowed countries like Taiwan, China, and South Korea to dominate global chip manufacturing.

Why Semiconductors Matter

Semiconductor chips are the unsung heroes of modern technology, powering everything from medical devices and industrial machinery to satellites and automobiles. Their importance became glaringly evident during the COVID-19 pandemic, when a global chip shortage disrupted industries worldwide. Automobile production ground to a halt, and even the supply of American weapons to Ukraine faced delays.

The rise of artificial intelligence (AI) has further intensified the demand for high-performance chips, which are essential for AI training and processing. Companies like NVIDIA, a leader in AI-focused GPUs, have seen their market capitalization soar beyond $1 trillion, highlighting the centrality of chips in future technologies.

Geopolitics has also underscored the strategic importance of semiconductors. The United States has imposed export restrictions on advanced chips and manufacturing equipment to limit China’s technological capabilities, especially in AI and defense. In response, China has ramped up investments in its domestic chip industry. Taiwan, home to the Taiwan Semiconductor Manufacturing Company (TSMC), holds a near-monopoly on cutting-edge chip production, giving it immense strategic leverage.

India’s Renewed Semiconductor Push

India’s lack of domestic chip production has historically made it reliant on imports for critical technologies. However, the government’s renewed focus on fostering an indigenous semiconductor industry is changing that narrative.

Following the PLI scheme for chip manufacturing in 2021, the government introduced the Design Linked Incentive (DLI) scheme to support domestic chip design companies. To date, 23 design projects have been sanctioned, and 10 semiconductor manufacturing projects worth over Rs 1.6 lakh crore have been approved across states like Gujarat, Assam, Uttar Pradesh, and Andhra Pradesh.

Key initiatives include Tata-Powerchip Semiconductor Corp’s fabrication unit in Dholera, Micron’s OSAT (Outsourced Semiconductor Assembly and Test) plant in Gujarat, and AMD’s largest global design center in Bengaluru. These projects place India at various points in the semiconductor value chain, from fabrication to testing and design.

Seizing a Strategic Opportunity

As global supply chains pivot away from China amidst geopolitical tensions, India has a unique opportunity to position itself as a reliable semiconductor hub. The government is now planning the second phase of the India Semiconductor Mission, focusing on attracting component manufacturers and raw material suppliers to build a comprehensive ecosystem.

The Vikram processor represents more than just a technological achievement—it symbolizes India’s determination to reclaim lost ground in the semiconductor race. With billions of dollars in investment and a growing talent pool, India is finally making strides toward becoming a key player in the global chip industry.

As the race for semiconductor dominance intensifies, India’s efforts to establish an indigenous chip industry could reshape its role in the global balance of power, ensuring technological sovereignty and economic resilience for years to come.