How India is moving from semiconductor design talent to a broader investable ecosystem
For decades, India’s role in semiconductors was largely defined by engineering talent. Global companies built major design and R&D operations in India, but the physical semiconductor value chain remained concentrated in countries such as Taiwan, South Korea, Japan, the US and China.
That is changing.
India is now moving from being primarily a semiconductor design and engineering hub toward building a broader semiconductor ecosystem spanning manufacturing, packaging, chip design, indigenous IP, advanced packaging, testing, equipment, materials and application-specific silicon.
The scale of the policy commitment illustrates how significant this transition has become. India’s Semicon 2.0 programme carries an outlay of ₹1,27,500 crore, while the first phase of the programme has already approved 12 semiconductor manufacturing and packaging projects representing more than ₹1.64 lakh crore of cumulative investment.
The question is therefore no longer simply whether India will enter semiconductors. It is:
Which parts of the semiconductor value chain can India make globally competitive and where will the next generation of investable companies emerge?
Understanding the ecosystem
A semiconductor ecosystem extends far beyond a fabrication plant.
Chip architecture & design → semiconductor IP & EDA → materials → wafer fabrication → assembly, packaging & testing → equipment → electronic systems → end applications
The ecosystem is supported by R&D, talent, infrastructure, capital, supply chains and government policy.
That distinction matters because India’s opportunity does not require it to replicate Taiwan across every layer. India can create significant value by developing globally competitive positions in selected segments.
India is reaching an inflection point
India’s semiconductor policy has evolved from attracting manufacturing investment toward building an integrated ecosystem covering fabs, OSAT/ATMP, design, advanced packaging, equipment, materials, R&D and talent.
Large projects from Tata Electronics, Micron, CG Power, Kaynes, HCL Foxconn, Suchi Semicon and others are establishing physical manufacturing and packaging capacity. Global companies including ASML, Micron, Renesas, Lam Research, Applied Materials and Qualcomm are also deepening their presence in India’s semiconductor and deep tech ecosystem.
But the more interesting development may be happening at the startup level.
The government reports 105 startups/MSMEs developing semiconductor chips, while 24 semiconductor design projects have received financial support. This indicates that India’s semiconductor story is expanding beyond large-capex manufacturing projects into a growing pipeline of indigenous semiconductor products and IP.
This is perhaps the most important transition. India is beginning to move from “Indian engineers designing chips for global companies” toward “Indian companies owning semiconductor IP and building products for global markets.”
From design capability to actual silicon
The critical question for semiconductor startups is whether they can progress from an architecture and prototype to tape-out, silicon validation and commercial production.
That transition is beginning to occur. Recent reporting indicates that DLI-backed semiconductor companies have reached 35 tape-outs and more than $100 million in cumulative venture funding. The significance is not simply the amount of capital raised or the number of designs taped out.
It demonstrates that an ecosystem is beginning to form around the difficult middle of the semiconductor journey:
Design → Tape-out → Silicon → Validation → Certification → Customer → Production
That middle is where semiconductor companies require substantial technical expertise, patient capital and ecosystem access. It is also where some of the most interesting investment opportunities could emerge.
Where India is strongest
India already possesses several important advantages:
- A large semiconductor engineering talent pool.
- Established design and R&D centres of global semiconductor companies.
- A large domestic electronics and automotive market.
- Growing defence and strategic demand for indigenous technology.
- Strong software and AI capabilities that can complement semiconductor design.
- Increasing government support for semiconductor design and manufacturing.
- A growing base of fabless semiconductor startups.
The next opportunity is to connect these capabilities into a functioning commercial ecosystem.
What is still missing?
This is where the investment opportunity becomes particularly interesting.
India remains relatively dependent on global suppliers for specialty materials, semiconductor grade chemicals, wafers, sophisticated manufacturing equipment and parts of the EDA stack.
There are also gaps in:
- advanced packaging and chiplet integration;
- semiconductor testing and qualification;
- high end semiconductor equipment;
- specialised materials;
- semiconductor IP;
- AI assisted chip design;
- reliable long duration capital;
- commercialisation between tape-out and high volume production.
These gaps could become the foundation for the next generation of Indian semiconductor companies.
India does not necessarily need to compete head on with ASML in lithography or TSMC in leading edge fabrication.
A more realistic and potentially more attractive strategy is to build globally competitive companies around the semiconductor ecosystem.
Where the next opportunities could emerge
Six areas deserve particular attention.
1. Application specific silicon
AI, automotive, robotics, drones, defence and industrial automation are creating demand for specialised, low power compute.
2. Power semiconductors
GaN and SiC are becoming increasingly important for EVs, renewable energy, industrial systems and AI infrastructure.
3. Advanced packaging
Chiplets, 2.5D/3D integration and system-in-package technologies are becoming increasingly important as conventional scaling becomes more difficult and expensive.
4. Semiconductor equipment and materials
India’s manufacturing build out creates a domestic customer base for specialised equipment, process control systems, materials and supporting technologies.
5. Semiconductor IP and design infrastructure
RISC-V, verification, EDA, AI assisted chip design, security and reusable semiconductor IP could become significant software-plus-hardware opportunities.
6. Testing, qualification and commercialisation
The ability to take a chip from successful tape-out to certified, reliable, volume production is itself a valuable capability.
Capital is beginning to follow the opportunity
The investment landscape is also changing.
Specialist investors such as Yali Capital, Speciale Invest and TDK Ventures, along with investors such as Peak XV, Unicorn Ventures, Inflexor Ventures, 3one4 Capital, Vertex Ventures, IAN Alpha Fund, Mela Ventures, Rocketship.vc, Zoho Corporation, IVYCap Ventures, Golden Sparrow Ventures, IIMA venrtures, and others, have demonstrated interest in Indian semiconductor and deep-tech companies.
Strategic capital is becoming equally important. Qualcomm Ventures, Micron, NVIDIA, Applied Materials, Lam Research and other global technology companies are increasingly involved in India’s deep tech ecosystem.
The India Deep Tech Alliance is another important development because it brings together venture investors, strategic technology companies and Indian deep tech founders.
The emerging pattern suggests that investors are not simply betting on “chips.”
They are looking for companies that solve large, strategically important bottlenecks created by AI, electrification, defence, automotive and the increasing complexity of computing.
What should investors look for?
Semiconductor investing requires a different framework from conventional software investing.
A technically impressive chip is not necessarily a good investment. Investors should examine:
IP defensibility → architecture → tape-out → silicon validation → customer qualification → production economics → volume opportunity.
The critical question is:
Why will a customer redesign its product around this technology?
Companies that can answer that question and have a credible path from technology validation to commercial volume could become particularly valuable.
How could the ecosystem evolve?
The next few years could develop in three broad stages.
2026–2028: Build manufacturing, packaging and design infrastructure while increasing the number of Indian fabless companies reaching tape-out.
2028–2030: Scale production, advanced packaging, semiconductor equipment and materials, while increasing global customer adoption.
2030 onward: India could move from being primarily a semiconductor engineering and manufacturing participant toward becoming a meaningful owner of semiconductor IP, products and specialised ecosystem capabilities.
India does not need to dominate every layer. It needs to own enough critical, defensible and globally relevant layers to become difficult to ignore.
The investment thesis
The semiconductor opportunity in India may ultimately be much bigger than the chip itself.
The first wave is building fabs and packaging facilities. The next wave could be the companies that supply those facilities, create the IP, design the chips, test them, package them, secure them, power them and integrate them into AI, automotive, defence, industrial and consumer systems.
That creates a potentially significant new investment category at the intersection of deep tech, industrial technology, AI, electronics and strategic infrastructure.
For investors, the question is no longer:
“Will India have a semiconductor industry?”
It is:
“Which companies will own the most valuable parts of India’s semiconductor ecosystem?”
That is the question worth watching over the next decade.
