A new semiconductor power is emerging

India intends to become one of the main players in the semiconductor production market.

India will soon begin producing microchips on its territory. Several large famous companies have decided to invest in this venture, which has allowed the launch of the first line to be brought forward sharply. According to the plan, production should begin before the end of 2026. So far, Taiwan is the leader in this segment.

India intends to become one of the main players in the semiconductor production market. The first microchips should roll off the assembly line in this country no later than 2027, that is, within the next two years. The US is not without its participation in this plan. The New World has long seen India as a promising country for the IT sector – for example, local factories have been mass-producing various Apple equipment for the past few years.

AMD, Nvidia, and Micron, the largest companies in their industries, have shown interest in producing chips in India. As Indian Commerce Minister Piyush Goyal told CNBC, India has already attracted investments from these companies, but their size is not reported. Goyal also mentioned Apple, saying that up to 14% of all its equipment is already assembled in Indian factories. According to him, the company has created about 150 thousand jobs in the country.

According to Goyal, India could very well use the experience of Taiwanese company TSMC – the world’s largest contract manufacturer of semiconductors with more than 50 percent of the global market share. However, it is unlikely to share knowledge with a potential competitor. Goyal emphasized that even without TSMC’s help, India can cope with this “difficult task.” He noted that India “has talent and skills.” More precisely, such skills are possessed by Indians, who work in large numbers in IT companies in Silicon Valley, the minister noted.

It is worth emphasizing that AMD and Nvidia have enormous experience in developing chips – AMD is successfully dominating the x86 processor market and simultaneously competing with Nvidia in the graphics accelerator segment, where the latter is an unrivaled leader. But neither AMD nor Nvidia manufactures their own products – TSMC does this instead.

In his interview with CNBC, Goyal specifically mentioned China, emphasizing that India is not technologically dependent on it in any way. According to him, India’s experience and knowledge in the IT sphere are better than China’s. These words can easily be questioned. At the time of publication of the material, there was not a single Indian processor in the world, while China produces chips on the ARM and x86 architectures at its own facilities. China is also actively developing RISC-V and even developing a separate version of this architecture called RISC-X. Moreover, the country has a company called Loongson, which creates its own LoongArch architecture and processors based on it.

Goyal did not specify what technological processes Nvidia, Micron, and AMD are counting on when investing in Indian semiconductor production. However, the likelihood that India will instantly catch up with important technology.

This is indicated, for example, by the plan of the Taiwanese company PSMC, another vendor of microchips, to build a factory in India to produce chips according to standards of up to 28 nanometers. This technological process is about 15 years old, it is considered “mature”, that is, in other words, morally obsolete. PSMC will build such a factory together with the Indian conglomerate Tata, and it will be located in the Indian state of Gujarat. According to the plan, the new factory will be maximally automated and will be able to process up to 50 thousand silicon wafers per month. Investments in the project will amount to at least $11 billion. The new factory will provide about 20 thousand new jobs. The launch dates of the factory have not been announced.

Thus, we see that India is becoming an increasingly powerful and technologically important player in the region and the world. In a changing world, where the old international system is in deep decline and the influence of new powerful countries is growing, India can take its rightful place. The previous competition and hostility with the aggressive neighbor, the Islamic Republic of Pakistan, certainly hamper India’s growth and development to a certain extent. New Delhi has to pay attention and spend significant resources to curb Islamabad’s aggressive actions. However, there is no longer any point in talking about any kind of parity. Over the past decades, India has moved far ahead and Pakistan cannot be called a serious competitor to New Delhi.

It is especially worth emphasizing the smart and subtle foreign policy of India, which has close, trusting relationships with many centers of power. Thus, despite all the pressure from the United States and the West, Prime Minister Narendra Modi did not back down and did not reduce the level of cooperation with Russia. The same can be said about Iran, with which the Indians have close and trusting relations. At the same time, despite the constant support of Pakistan from the West, India has also managed to maintain close relations with leading technological countries.

Georgi Asatrian
Georgi Asatrian
Georgi Asatryan, associate professor, Lomonosov Moscow State University and Plekhanov Russian University of Economics.