How ISM is Putting India in the Game of Semiconductors
Day 9 of diving into semiconductor industry.
My brother, being a computer science enthusiast, was bragging about his knowledge about CPUs, GPUs & stuff. I thought I could flex but he didn’t allow me.
Nvm :)
The world of semiconductors is like a high-stakes chess game, and India has finally moved its first major pieces onto the board. For years, the global chip industry has been dominated by a few key players—Taiwan (thanks to TSMC), the US (home to NVIDIA, Intel, and AMD), and South Korea (Samsung, SK Hynix). But here’s the catch: This overconcentration makes the industry vulnerable, especially with geopolitical tensions (China is obsessed with merging Taiwan into its country, and this will surely send shivers in the semiconductor industry).
India has a huge market for electronics - India is the world’s second-largest smartphone market, registering over 150 million smartphone shipments annually.
By 2025, this market is expected to be worth over $400 billion.
But there’s a problem: We import nearly 85-90% of our semiconductor requirements. That’s a huge dependency. If global supply chains get disrupted (like during COVID or due to political tensions), we’re in trouble.
Enter ISM—India’s big bet to reduce imports, build chip-making capabilities, and this can prolly be seen as our beginning phase to join the global semiconductor club.
What is the India Semiconductor Mission (ISM)?
ISM is India’s official plan to become a major semiconductor powerhouse. It falls under the Ministry of Electronics and Information Technology (MeitY) and comes with ₹76,000 crore (~$9 billion) in government funding to support chip manufacturing, design, and research.
Think of ISM as India’s master plan to go from “chip consumer” to “chip producer.”
What are ISM’s 4 Key Schemes
Semiconductor Fab Scheme (Chip Factories)
What it does: Supports companies setting up wafer fabrication units (fabs). These fabs are where raw silicon turns into microchips.
Support: Up to 50% of project cost covered.
Why it matters: India is setting up its first semiconductor fab in Dholera, Gujarat, led by Tata Electronics & Taiwan’s PSMC (₹91,000 crore investment).
2. Display Fab Scheme (Making Screens, Not Just Chips)
What it does: Encourages companies to manufacture LCD, OLED, and micro-LED displays in India.
Support: Up to 50% of project cost covered.
Why it matters: India imports most of its display panels. This scheme ensures that future smartphones, TVs, and tablets have “Made in India” screens. Recently Tata Electronics is making up display semiconductor chips in Gujarat
Compound Semiconductors & ATMP/OSAT (Packaging and Testing)
What it does: Supports advanced semiconductor packaging and testing units. These facilities handle the final steps in chip production (like putting them into casings and ensuring they work).
Support: 50% of capital investment covered.
Why it matters: Micron’s packaging plant in Gujarat falls under this. Packaging is a $50 billion industry, and India wants a slice of the pie. Companies like Suchi Semicon in Gujarat are pioneering Outsourced Semiconductor Assembly and Testing (OSAT)—a crucial step in the chip-making process.
Design Linked Incentive (DLI) Scheme
What it does: Supports Indian startups and companies in chip design (ICs, SoCs, chipsets, etc.).
Support: Financial incentives + R&D funding.
Why it matters: India has 120,000 chip design engineers (20% of the world’s total!). We’re already designing chips for companies like Intel, Qualcomm, and Apple. And India ranks third globally in chip design research papers. It’s just we haven’t had a robust fab ecosystem to process our chips.
Where have we started from, what are the outcomes of ISM 1.O?
ISM 1.0 Recap (2021-Present):
Budget: ₹76,000 Cr
- Focus: This phase primarily targeted the ATMP (Assembly, Testing, Marking, and Packaging) segment of the semiconductor value chain, laying the groundwork for India's chip manufacturing ecosystem.
Five key projects approved:
Tata-Powerchip fab in Dholera, Gujarat (₹91,000 Cr) – India's first AI-enabled semiconductor fab.
Micron ATMP unit in Sanand (₹22,500 Cr) – Expected to produce its first chips in 2025.
Tata Group ATMP in Assam (₹27,000 Cr) – Strengthening India’s backend chip supply.
CG Power ATMP in Gujarat (₹7,600 Cr) – Advanced packaging capabilities.
Kaynes Technology ATMP in Gujarat (₹3,300 Cr) – Enhancing India's semiconductor assembly.
Additional 10 proposals under review
So all in all, we have been actively testing in the final stage semiconductor assembly, testing, and packaging. No mainstream fabs & foundries have yet got allocation.
India is on the right path, even though a side player rn, but we got everything a semiconductor industry needs to flourish (except making semiconductors mainstream:))
Talent Pool:
India is training 1.2 million semiconductor engineers by 2032 (compare that to the entire U.S. semiconductor workforce—just ~280,000).Market Size:
India’s semiconductor market will hit $64 billion by 2026 (possibly $110 billion by 2030). With growing demand in AI, 5G, EVs, IoT, we’re one of the biggest buyers of chips—makes sense to make them here too.Government Push:
India is throwing serious money into semiconductors—PLI schemes, tax breaks, infrastructure support—which is exactly how Taiwan and South Korea built their chip industries.Global Partnerships:
Companies like Applied Materials, Micron, Renesas, and Synopsys are already investing in India.
Tata’s semiconductor fab with Taiwan’s PSMC is just the start.
So basically, we need support from the existing players through JVs, partnerships, etc. to get a hold of this dense ecosystem.Foxconn, a Taiwan-based global player in operating in OSAT, has forged JVs with Indian companies like Vedanta (withdrawn tho), HCL, etc.
(More partnerships = faster progress)
ISM 2.O IS underway
Now that the first semiconductor fabs, packaging plants, and design hubs are taking shape, ISM 2.0 is about to drop. You've gotta watch the first season before jumping into the sequel. That’s why this deep dive was necessary before ISM 2.0 hits the scene.
Here’s what we can expect from the next ISM sequel according to S. Krishnan:
Expansion of Local Supply Chains – Moving beyond fabs to cover materials, gases, and chemicals needed for chip-making.
More Advanced Chips – India will aim for 7nm and below (right now, we’re starting with mature nodes like 28nm).
AI and IoT-Focused Chips – With AI exploding, expect specialized semiconductor R&D in India.
Global Alliances – More collaborations with the U.S., Europe, and Japan to secure tech transfers and investments.
India is no longer just an electronics consumer—it’s positioning itself as a semiconductor powerhouse. ISM 2.0 is about to raise the stakes. Excited (it’s strange I am excited for whats going to happen in the semi conductor industry, well I’ll get more things to write about)
BByee
-Abhishree