As international interest surges at SEMICON India, the country’s efforts to develop a robust semiconductor ecosystem grapple with talent, supply chain, and technological challenges posed by a booming AI hardware market driven by a data-centric revolution.
India’s semiconductor push is gathering pace just as artificial intelligence is reshaping global chip demand. Nearly 600 companies from 52 countries attended SEMICON India in New Delhi this week, where Prime Minister Narendra Modi said the country’s chip ecosystem was expanding quickly. The event, organised under the India Semiconductor Mission in the Ministry of Electronics and Information Technology, came as the industry entered what many analysts describe as a multiyear supercycle driven by AI and the data centres needed to run it.
The surge is being powered by a different kind of electronics boom from the ones that came before it. In the 1990s, computers lifted demand for chips; in the 2010s, smartphones did the same. Now the largest pull is coming from AI infrastructure, especially server farms that require specialised processors, graphics chips and high-bandwidth memory. These components must move vast quantities of data very quickly, and that has made advanced memory one of the industry’s tightest bottlenecks.
According to the article, the memory market is still heavily concentrated, with only a handful of firms producing high-bandwidth memory at scale. Micron has said such chips are more difficult and resource-intensive to make than standard memory, and the stacking process can be disrupted by defects in any one layer. The result is a supply chain that is both technically demanding and commercially valuable, particularly as AI hardware is increasingly sold through long-term contracts rather than ordinary consumer demand. SEMI’s account of the New Delhi conference also stressed wider industry concerns such as talent shortages, supply-chain redesign and sustainability.
For India, the opportunity is real but still partial. The country has approved 12 semiconductor projects under its first mission, and some packaging activity has started, including Micron’s facility in Gujarat and Sahasra Semiconductors’ work on NAND flash packaging. But India does not yet have a large wafer fabrication plant in commercial production, which means it is capturing only a slice of the value chain. Much of the AI boom is therefore being felt through higher import costs and tighter component supply rather than through direct profits from the most advanced chips.
Policy makers are now trying to move further up the stack. The next phase of the government’s semiconductor plan is meant to support packaging and other processes that link processors and memory, while a separate research push is aimed at chiplet technology. NITI Aayog has also recommended pilot lines for chiplets and high-bandwidth memory-class integration. At the same time, India’s design base remains a strategic advantage: the country accounts for a large share of the global chip workforce, and start-ups such as Netrasemi are developing edge-AI processors that run on-device rather than relying on the cloud. That suggests India’s best near-term opening may lie not in matching Taiwan or South Korea at the wafer-fabrication stage, but in building a broader design, packaging and systems ecosystem around the AI chip economy.
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