Can India Compete with China in Semiconductor Manufacturing?

In a world increasingly driven by digital technology, semiconductors are the new oil — powering everything from smartphones to satellites. As global demand surges and supply chains shift, the race to dominate semiconductor manufacturing has intensified. While China has already positioned itself as a major player, India is now stepping into the arena with ambitious plans. But the big question remains: Can India realistically compete with China in semiconductor manufacturing?

The Current Landscape

China has spent over $150 billion in the past two decades to build a self-reliant semiconductor ecosystem. Though it still depends on foreign technology for high-end chips, China has a solid network of fabrication units, assembly lines, and talent. Companies like SMIC (Semiconductor Manufacturing International Corporation) and Yangtze Memory Technologies have become central players in global chip supply, particularly for mid- and low-tier products.

India, on the other hand, is a late entrant. Despite having strong design talent — nearly 20% of the world’s chip design engineers are based in India — the country has lacked actual fabrication facilities (called fabs), which are central to manufacturing. Until recently, India imported nearly 100% of its semiconductors, making it highly vulnerable to global disruptions like the COVID-19-induced chip shortage.

Government Push and Policy Support

India is now making bold moves. In 2021, the government launched the Semicon India Programme with a ₹76,000 crore ($10 billion) incentive scheme to attract global and domestic semiconductor players. Several MoUs and partnerships have been signed since then:

Vedanta-Foxconn proposed a $19.5 billion semiconductor plant in Gujarat.

Micron Technology, a U.S.-based firm, is setting up a $2.75 billion chip assembly and testing unit.

Tata Group has announced plans to invest in semiconductor packaging and chip production.

These moves show promise, but the journey is far from easy.

Key Challenges for India

1. Lack of Infrastructure

Semiconductor fabs require ultra-clean rooms, uninterrupted power, and a massive supply of pure water. India still lacks such industrial zones specifically geared for chip manufacturing.

2. Skill Gap in Manufacturing

While India excels in chip design, it lacks skilled manpower for operating and managing fabs. Specialized training programs are only now being introduced.

3. High Entry Costs

Building a single semiconductor fab can cost between $5 to $20 billion. India must ensure long-term policy stability and reduce bureaucratic delays to attract such investments.

4. Technology Dependence

The most advanced chips (under 10nm) are still dominated by Taiwan’s TSMC and South Korea’s Samsung. India will need international collaborations to bridge the technology gap.

Opportunities in India’s Favor

1. Geopolitical Advantage

Global companies are looking to reduce dependence on China due to trade tensions and security concerns. India, with its large market and democratic governance, becomes an attractive alternative.

2. Talent Pool

India already has a rich pool of engineers and chip designers working with companies like Intel, AMD, and Qualcomm. Leveraging this expertise for local manufacturing can accelerate growth.

3. Strategic Partnerships

Collaborations with countries like the U.S., Japan, and Taiwan under the Quad alliance and other bilateral tech partnerships are helping India gain access to critical semiconductor technologies.

The Road Ahead

India is unlikely to surpass China overnight, given China’s two-decade head start. However, the global semiconductor landscape is rapidly evolving. With sustained investments, favorable policies, and the right international collaborations, India can emerge as a strong second hub for semiconductor manufacturing — especially in chip packaging, testing, and mid-level fabrication.

The key will be execution. If India can build a reliable supply chain, nurture talent, and maintain investor confidence, it may not just compete with China but become a strategic counterweight in the global chip economy.

India’s semiconductor ambitions are bold, timely, and necessary. While it may not dethrone China immediately, it can carve a strong and independent path. In the long run, India doesn’t need to beat China — it just needs to build a self-reliant and resilient semiconductor ecosystem that secures its technological future.