State of India's Semiconductor Industry

A Comprehensive Analysis of Capabilities and Future Growth

Key Takeaways

Current Limitations: India lacks advanced semiconductor manufacturing capabilities, heavily relying on imports for high-end components essential for flagship smartphones.
Strategic Roadmap: Focusing on mature semiconductor nodes (28nm–14nm) provides a feasible pathway toward self-sufficiency, with substantial investments in R&D and infrastructure.
Long-Term Vision: Achieving competitiveness in the global semiconductor market requires a sustained 10-15 year commitment, encompassing policy support, workforce development, and international collaborations.

Current Capabilities and Limitations

Indigenous Smartphone Production

1. Can India Build a Smartphone Completely Indigenously?

As of January 2025, India cannot manufacture a smartphone entirely with domestic resources. While the country has made notable progress in assembling smartphones and producing certain components locally, it still depends significantly on imported advanced semiconductors, displays, and other critical parts essential for high-performance devices. The semiconductor fabrication ecosystem in India remains in its developmental stages, limiting the production of cutting-edge chips needed for flagship smartphones.

2. What Kind of Smartphone Can India Build Today Using Existing Capabilities?

With its current technological landscape, India is capable of producing low-to-mid-range smartphones. These devices can incorporate domestically assembled LCD displays, lithium-ion batteries, and basic processor units manufactured using older semiconductor technologies (e.g., 28nm or above). However, even these smartphones would rely on imported components for advanced functionalities such as high-resolution cameras, sensors, and high-performance memory chips.

3. What Is India's Indigenous Flagship Smartphone?

At present, India does not possess an indigenous flagship smartphone that matches the performance and features of global leaders like Apple or Samsung. Indian brands primarily focus on affordability, offering entry-level and mid-range devices without the advanced technological integrations required for flagship status, such as sub-7nm processors, high-refresh-rate OLED displays, and sophisticated camera systems.

4. What Is the Best Smartphone India Can Build Independently, Cut Off from Foreign Resources?

If India were to produce smartphones entirely independently, devoid of foreign resources, the resulting devices would likely be basic feature phones or low-end smartphones. These would utilize outdated semiconductor technologies (28nm or larger nodes), simple LCD screens, limited storage and RAM, and low-resolution camera sensors. Such devices would fall significantly short of global standards in performance, aesthetics, and user experience.

Technological Gaps

5. Technological Gap Between India's Potential Flagship and Global Flagships

Component	Global Flagships	India's Current Capability
Processor	3nm/4nm chips (e.g., Apple A18, Snapdragon 8 Gen 4)	28nm or larger nodes
Display	Advanced AMOLED/OLED with high refresh rates	Basic LCD panels
Camera Modules	Multi-lens setups with advanced computational photography	Low-resolution sensors
Memory	LPDDR5X RAM and UFS 4.0 storage	Limited storage and older RAM technologies
Connectivity	Advanced 5G modems and antennas	Limited 5G capabilities
Software Integration	Optimized OS and vertical integration (e.g., Apple)	Limited custom OS optimizations

The technological disparity is pronounced, with global leaders advancing rapidly in integrating superior components that afford enhanced performance, efficiency, and user experience. India's semiconductor manufacturing lag hinders its ability to produce smartphones that can compete at the highest levels internationally.

Strategies to Bridge the Gap

6. How Can India Fill This Gap? What Will It Take and How Long Will It Take?

Bridging the substantial technological gap in India's semiconductor industry necessitates a multifaceted strategy encompassing infrastructure development, policy support, and human capital enhancement.

Investment in Semiconductor Fabrication

Establishing advanced semiconductor fabrication plants (fabs) is paramount. This includes setting up facilities capable of producing sub-7nm chips, which are essential for modern flagship smartphones. The India Semiconductor Mission (ISM) is pivotal in providing financial incentives and facilitating partnerships with global semiconductor leaders to attract investments and technology transfers.

Developing a Robust Supply Chain

A resilient supply chain is critical for semiconductor manufacturing. This involves cultivating a network of suppliers and manufacturers for components such as displays, memory chips, sensors, and power management units. Strengthening domestic production capabilities in these areas will reduce dependency on imports and enhance self-sufficiency.

Focus on Research and Development

Significant investments in R&D are necessary to foster innovation in semiconductor technologies. Establishing research centers and collaborating with academic institutions can drive advancements in chip design, materials science, and manufacturing processes. Encouraging homegrown innovations like the SHAKTI and VEGA processor designs based on RISC-V architecture exemplifies this approach.

Training a Skilled Workforce

Developing a specialized workforce is essential for the semiconductor industry's growth. This involves enhancing education and training programs in semiconductor design, fabrication, and testing. Initiatives to collaborate with universities and technical institutes will help build a talent pipeline capable of supporting advanced manufacturing processes.

Forming International Collaborations

Engaging in partnerships with established global semiconductor companies like TSMC and Intel can facilitate technology transfer and best practices adoption. These collaborations can accelerate the development of local manufacturing capabilities and integrate India's semiconductor industry into the global supply chain.

Implementation of Incentive Schemes

Expanding production-linked incentive (PLI) schemes can attract more private investment into the semiconductor sector. Offering financial incentives, tax breaks, and subsidies for semiconductor projects will make India a more attractive destination for investments in this high-capital industry.

Timeline: Achieving a self-reliant semiconductor ecosystem is a long-term endeavor, projected to take approximately 10-15 years. This timeline accounts for the complexities of establishing manufacturing infrastructures, developing supply chains, and nurturing a skilled workforce, alongside sustained policy support and investment.

Strategic Node Targeting

7. Can We and Should We Skip a Few Generations?

Despite the rapid advancements in semiconductor technologies globally, it is neither feasible nor advisable for India to skip generations in the nanometer race. Each semiconductor node builds on the knowledge, infrastructure, and capabilities developed in previous generations. Therefore, a phased approach focusing on establishing a strong foundation in mature nodes is more pragmatic.

Focus on Mature Nodes (28nm–14nm)

Targeting mature semiconductor nodes such as 28nm and 14nm presents a balanced approach. These nodes are integral for a range of applications, including Internet of Things (IoT) devices, automotive electronics, and mid-range smartphones. The investment required for these nodes is significantly lower compared to cutting-edge nodes, making them economically viable while still covering a broad spectrum of domestic and export market needs.

Prioritize Emerging Technologies

While focusing on mature nodes, India should also invest in emerging technologies like open-source processor architectures (e.g., RISC-V) and specialized chips for specific applications such as power management and 5G infrastructure. This dual approach ensures that India can cater to both current market demands and future technological advancements.

By concentrating on mature nodes and strategic technologies, India can build a robust semiconductor base that supports a wide array of industries while setting the stage for future advancements in more sophisticated semiconductor manufacturing.

8. What Size of Chipsets Covers the Technological Ground While Making the Most Economic Sense for a Country Like India?

For India, targeting semiconductor nodes between 28nm and 65nm strikes an optimal balance between economic feasibility and technological coverage. These nodes are extensively used in various sectors, including automotive electronics, industrial applications, and basic IoT devices. Moreover, focusing on these nodes entails lower capital expenditures and shorter lead times, facilitating quicker establishment of manufacturing capabilities while catering to both domestic needs and export potentials.

By prioritizing these semiconductor sizes, India can develop a sustainable and economically sensible semiconductor industry that serves a diverse range of applications, thereby laying a strong foundation for future technological advancements.

Future Outlook and Timeline

The trajectory of India's semiconductor industry is poised at a critical juncture. With the government’s proactive initiatives, such as the India Semiconductor Mission and substantial investment incentives under the Production Linked Incentive (PLI) schemes, the foundation for a burgeoning semiconductor ecosystem is being established. However, the path to achieving self-sufficiency and global competitiveness is laden with challenges that require persistent and coordinated efforts.

Short-Term Goals (1-5 Years)

Establishing Basic Fabrication Facilities: Setting up manufacturing plants capable of producing mature node chipsets (28nm–14nm).
Developing Supply Chains: Building a reliable network of suppliers for essential components like displays, memory, and sensors.
Enhancing R&D Capabilities: Investing in research centers and fostering innovation in semiconductor design and manufacturing technologies.
Skill Development: Launching training programs to cultivate a skilled workforce specialized in semiconductor technologies.

Medium-Term Goals (5-10 Years)

Scaling Up Manufacturing Capabilities: Expanding semiconductor fabrication plants to handle more advanced nodes and higher production volumes.
Strengthening International Collaborations: Forming strategic partnerships with global semiconductor leaders for technology transfer and joint ventures.
Expanding the Domestic Market: Encouraging the adoption of domestically produced semiconductor components across various industries.
Innovating in Emerging Technologies: Investing in next-generation technologies like quantum computing and AI-driven chip designs.

Long-Term Goals (10-15 Years)

Achieving Self-Sufficiency: Establishing a fully self-reliant semiconductor ecosystem capable of producing advanced nodes below 7nm.
Global Competitiveness: Positioning India as a key player in the global semiconductor market, with capabilities to supply high-performance components to international markets.
Sustained Innovation: Continually advancing semiconductor technologies through ongoing R&D and fostering a culture of innovation and excellence.

While ambitious, the outlined timeline is achievable with unwavering commitment, strategic investments, and cohesive policy frameworks. The sustained effort over the next decade will be instrumental in transforming India's semiconductor industry from its nascent stage to a globally competitive force.

Conclusion

India stands at a pivotal moment in its quest to develop a robust semiconductor industry. While current capabilities allow for the assembly of low-to-mid-range smartphones, the production of a flagship smartphone entirely from indigenous components remains out of reach due to significant technological and infrastructural gaps. Bridging this divide requires a comprehensive strategy centered on establishing advanced semiconductor fabrication facilities, developing a resilient supply chain, investing heavily in research and development, and cultivating a skilled workforce.

The strategic targeting of mature semiconductor nodes offers a pragmatic pathway toward self-sufficiency, providing immediate economic benefits and laying the groundwork for future advancements. However, the journey demands sustained investment, strong policy support, and international collaborations to navigate the complexities of semiconductor manufacturing.

With a clear roadmap and concerted efforts spanning the next 10-15 years, India has the potential to transform its semiconductor industry, reduce dependency on imports, and emerge as a competitive player in the global market. This evolution will not only bolster the domestic electronics sector but also contribute significantly to the nation's overall technological and economic growth.

References

Semiconductor Industry in India: Incentives and Key Players
Assessing India's Readiness to Assume a Greater Role in Global Semiconductor Industry
Is India “Ready” for Semiconductor Manufacturing?
India's Emergence as a Semiconductor Manufacturing Hub
India’s Semiconductor Growth Story: Opportunities and Challenges
Press Release: India Semiconductor Mission Progress (PIB)
Semiconductor Manufacturing in India: Current Trends - Economic Times
Budget 2025 Expectations from the Indian Semiconductor Industry
India’s Semiconductor Push: Building a Robust Chip Manufacturing Ecosystem
The Dawn of India’s Semiconductor Era
The Growth of India's Semiconductor Industry to $110 Billion by 2030