Semiconductors
v1 · draft
Summary
A chip starts as a design built on licensed EDA software and IP, is etched onto silicon wafers in a fab using imported tools, gases and chemicals, and is then cut, packaged and tested before it goes into phones, cars and industrial electronics. Value pools at the ends of the chain, with the EDA and IP owners, the fabless designers, the toolmakers and the leading-edge fabs, while packaging and device assembly earn thinner margins. India has long been strong in design services and device assembly but has had no commercial fab, and a NITI Aayog roadmap counts nearly $150 billion of semiconductor imports between FY2017 and FY2025. The India Semiconductor Mission is changing that, with 12 approved projects and cumulative investments of around Rs 1.64 lakh crore, most of them packaging units plus Tata Electronics' fab at Dholera.
Why now
India was earlier more into chip design and packaging, and imported the chips its electronics industry used, spending nearly $150 billion importing semiconductor products between FY 2017 and FY 2025. After the chip scarcity of the Covid years it decided to go for manufacturing: 12 plants have been approved under the first phase of the India Semiconductor Mission, and the IT minister said in August 2026 that three have already started manufacturing. The second phase, Semicon 2.0, was notified the same month as a Rs 1,27,500 crore programme that reaches beyond fabs to chip design and IP, equipment, materials, advanced packaging, research and talent.
Value chain snapshot
| 1 | EDA Tools & IP | Design software and licensed building blocks that every chip project starts from. | high |
| 2 | Chip Design | Fabless product companies and design service houses that turn specs into tape-outs. | high |
| 3 | Wafers, Gases & Chemicals | Silicon wafers, ultra high purity gases and specialty chemicals consumed in fabs and packaging. | medium |
| 4 | Fab & Test Equipment | Deposition, etch, lithography and test tools that make and check chips. | high |
| 5 | Wafer Fabrication | Foundries and fabs that pattern circuits onto silicon and compound semiconductor wafers. | high |
| 6 | Assembly, Test & Packaging (OSAT/ATMP) | Cutting wafers into chips, packaging them and testing them before shipment. | medium |
| 7 | Electronics Manufacturing & End Demand | Device and board makers that buy chips for phones, appliances, cars and industrial gear. | low |
Indian players
- MosChip Technologies (Chip Design)
- L&T Semiconductor Technologies (Chip Design)
- Tessolve (Chip Design)
- Mindgrove Technologies (Chip Design)
- KASFAB Tools (Fab & Test Equipment)
- Tata Electronics (Wafer Fabrication)
Global reference points
- Synopsys (EDA Tools & IP)
- Cadence Design Systems (EDA Tools & IP)
- Arm (EDA Tools & IP)
- Applied Materials (Fab & Test Equipment)
Non-obvious insight
Building a fab in India still means buying most of it abroad: Fab Economics estimates import dependence of more than 85% of fab project costs and around 50% of wafer manufacturing costs today, falling to roughly 68% and 30% by 2030.
Core assumption
That the new fabs and packaging plants reach steady-state yields and a customer base large enough for global toolmakers and materials suppliers to manufacture in India, rather than India remaining a site that assembles imported inputs.
Things to watch
- Commercial wafer output from Tata Electronics' Dholera fab, and how quickly it reaches steady yields
- Approvals under Semicon 2.0 for equipment, materials and advanced packaging projects
- A global toolmaker moving from R&D and engineering in India to manufacturing here
Educational research only. Not investment advice. Not a SEBI registered adviser or research analyst. Sources are listed on the full map.