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India's Investing in Semiconductor FAB Units for Supply Chain Resilience

Published: 3.20.2024

India is taking a significant turn from its renowned software industry towards establishing a foothold in the semiconductor sector. With a hefty investment in setting up 'FAB units' for chip manufacturing, the nation is gearing up to diversify its technological prowess and secure a vital spot in the global production network, aiming to accelerate its economic expansion. 

The Pivotal Role of Semiconductors 

At the heart of virtually all modern electronic devices, semiconductors are crucial for the functionality of a wide array of products, from everyday gadgets to sophisticated systems. The global shortage experienced during the COVID-19 pandemic highlighted the critical need for a secure and reliable semiconductor supply chain. India's move towards developing its semiconductor manufacturing capabilities is a step towards ensuring technological self-reliance and a strategic maneuver to mitigate future supply chain disruptions. 


Laying Out India's Semiconductor Ambitions 

The Indian government is rolling out the red carpet for the semiconductor industry with its ambitious $10 billion incentive program. This initiative is designed to lure international firms to establish production and research bases in India, promoting a self-sustaining ecosystem around semiconductor manufacturing, including the crucial FAB units required for chip production, and fostering domestic design and innovation. 


Navigating the Challenges 

Embarking on semiconductor production presents formidable challenges, including the hefty financial outlay needed to set up fabrication facilities, securing a skilled workforce, and establishing a reliable supply chain. Nonetheless, India's journey is paved with opportunities, thanks to its abundant engineering talent and a strong base in semiconductor design and software development. Through targeted policy support and investment in infrastructure, skills development, and innovation, India aims to surmount these obstacles. 


Forging Global Alliances and Encouraging Local Innovation 

India is actively courting global semiconductor powerhouses to form partnerships and build a presence in the country, facilitating technology transfer and sharing industry best practices. At the same time, the government is nurturing an environment conducive to innovation among startups and domestic firms in the semiconductor space, aiming to develop a cohesive and integrated industry ecosystem. 

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