India's chip push must shift to using locally made semiconductors, report says
A report by EY and IESA says India's semiconductor strategy should move beyond capacity building to using locally designed, made and packaged chips in domestically produced products.
India's semiconductor strategy needs to look past manufacturing capacity alone and build an ecosystem in which chips designed, fabricated and packaged within the country are used in products developed and built domestically, according to a report by EY and the India Electronics and Semiconductor Association.
The report describes India's semiconductor journey as having entered a decisive phase, with the groundwork for a domestic ecosystem laid through public investment, anchor manufacturing projects, a widening design base and the policy framework under Semicon India 2.0.
The next stage, it suggests, calls for a self-sustaining semiconductor economy anchored in domestic demand, innovation and deeper value addition across the electronics chain. The aim is not simply to make chips in India, but to ensure that Indian-designed, Indian-produced and Indian-packaged chips find their way into products designed and manufactured within the country.
India is projected to become a semiconductor consumption market of roughly USD 200 billion by 2035. Much of that demand, however, currently sits inside imported electronic systems, modules, kits and assembled goods, leaving limited value capture onshore.
That gap, the report says, is an opening to strengthen domestic system design, electronics product development and advanced manufacturing in sectors including consumer electronics, automotive, industrial automation, telecommunications, aerospace, defence, medical devices and artificial intelligence.
Building up these downstream industries could turn domestic semiconductor demand into a driver of indigenous chip production. Generating such demand may matter as much as supply-side investment in fabrication, according to the report.
It identifies three strengths India can draw on: a globally competitive semiconductor design ecosystem, one of the fastest-growing electronics markets, and an increasingly attractive manufacturing base backed by a large talent pool. Harnessing these to build globally competitive products and platforms could give India a distinct place in global semiconductor supply chains.
Instead of retracing the path taken by established semiconductor-producing nations, the report argues, India can pursue a model built around design-led manufacturing, advanced packaging, compound semiconductors, trusted supply chains and system-level innovation.
With global supply chains diversifying as countries seek more resilient sources of chip production, the report sees room for India to position itself as a trusted partner in the global semiconductor ecosystem. The coming decade, it concludes, offers not just a chance to expand manufacturing capacity but also to establish India as a significant hub for semiconductor innovation, product development and electronics manufacturing.