Breaking: Gujarat Foundry push Highlights India’s Leap Into Mature-Chip Manufacturing

India’s drive too diversify its supply chains into semiconductors took a tangible step forward this week as a Gujarat-based module maker shipped its first batch of chip modules to a customer in California. The effort,led by Kaynes Semicon and its Japanese and Malaysian partners,unfolds within a state‑backed program that funds part of a broader $10 billion semiconductor push unveiled by Prime Minister Narendra Modi in 2021.

In parallel, India is moving ahead with its first commercial foundry for mature chips, also in Gujarat. The $11 billion project, built with technology transfer from a Taiwanese partner, is channeling Intel as a prospective customer. If triumphant, the plant could tilt the global supply chain a notch toward India even as it grapples with catching up to the world’s leading chipmakers.

Industry observers caution that while momentum is building, attracting sustained foreign investment and achieving cutting‑edge capabilities remains a long game.

Unprecedented Momentum in a Global Context

Semiconductors flow through a tripartite global system: design in the United States, fabrication in Taiwan, and increasingly complex packaging in China. India’s Gujarat project marks a new axis in this ecosystem, pairing Tata Group and Taiwan’s Powerchip Semiconductor Manufacturing Corporation, which are guiding the plant’s construction and knowledge transfer.

Decisive steps followed shortly after,with Tata Electronics signing a deal on December 8 to explore manufacturing and packaging of Intel products within Tata’s upcoming facilities,including the Gujarat foundry. The plan aims to meet rising domestic demand while positioning India for export opportunities.

Publicly funded incentives are already in play. Last year,Tata received a 50 percent subsidy for the foundry together with state incentives,with a potential operational timeline as early as December 2026. Even if delays persist, the project represents a historic milestone for India’s long‑standing quest to build a commercially viable fab.

Easy Entry Points, yet High Stakes

The Gujarat site will specialize in mature chips ranging from 28 nanometers to 110 nanometers. These nodes are comparatively easier to produce and continue to power the bulk of consumer electronics, automotive electronics, and industrial equipment, even as the industry races toward more advanced nodes for AI and high‑performance computing.

Meanwhile, multiple ATP (assembly, testing, and packaging) units are in progress across the country, offering a lower risk path to domestic capabilities. Projects include an Idaho‑based Micron facility and a Tata initiative in Assam, with investments totaling several billions of dollars and partnerships with firms such as Foxconn, Renesas, and Stars Microelectronics.

Ashok Chandak of the India Electronics and Semiconductor association says ATP units provide a practical route to scale, often requiring $50 million to $1 billion and carrying lower risk than a full foundry. Still, most projects are running behind their initial schedules, underscoring the challenges of bringing integrated supply chains online in India.

Domestic Demand Drives Policy And Investment

The primary focus of the new projects is to meet domestic demand for mature chips, anticipated to rise from about $50 billion today to roughly $100 billion by 2030.This push comes as india positions itself as a “China Plus One” destination, seeking to diversify global supply chains rather than merely displace existing manufacturers.

Imports of chips by India have surged, with 2024 figures up sharply and current year numbers continuing the trend. The government is signaling additional rounds of incentives to boost local intellectual property and attract foreign partners capable of operating at more advanced nodes beyond 28 nanometers.

Experts caution that to reach the leading edge-7nm and beyond-India will likely need stronger foreign collaborations, stronger power and infrastructure reliability, and regulatory reforms to ease doing business. Some industry voices argue that incentives should match or surpass peers to keep multinational chip design and manufacturing activities from migrating elsewhere.

Global Competition, Local Opportunities

Analysts note that even as India invests in mature‑chip manufacturing, the economics of advanced nodes remain dominated by a few global players.The United States has opted for aggressive domestic incentives, while China and Malaysia have introduced sizable tax supports to attract chip operations. For India, the strategy appears to be a dual track: build domestic ATP and mature‑chip capacity while courting foreign partnerships for future cutting‑edge work.

In this evolving landscape, industry experts emphasize policy precision and reliable infrastructure as essential catalysts for long‑term success. One observer described the ambition as a moonshot-technically demanding and policy‑critical, with outcomes that will hinge on execution as much as ambition.

Key Facts At a Glance

India’s chip design ecosystem remains a competitive edge, but industry voices say the nation will need broader incentives-especially to attract foreign partners operating at smaller nodes. The government has signaled a second incentives round to push the country toward more elegant manufacturing.

As global demand for semiconductors grows, India’s strategy blends domestic market expansion with international collaboration. The outcome will depend on sustained policy continuity, infrastructure reliability, and the ability to attract and retain world‑class partners willing to work at the leading edge of technology.

The Road Ahead – What This Means For readers

For consumers and businesses, India’s semiconductor ambitions could translate into more local sourcing options, tighter supply chains, and fewer disruptions tied to global shocks. For policymakers, the test lies in balancing incentives with lasting investment that can scale beyond mature chips into next‑generation nodes.

Two questions for readers: Will India’s growing chip ecosystem reduce dependence on foreign suppliers in the near term? Can domestic incentives rival international tax breaks to attract top-tier partners for the most advanced semiconductor manufacturing?

Share your thoughts below and join the conversation about India’s bold step into semiconductor manufacturing. How do you see this affecting local industries and global supply chains?

Disclaimer: This article discusses economic and policy developments. It does not constitute financial or investment advice.