India’s emerging outsourced semiconductor assembly and test industry is expanding its supplier base beyond China, aiming to reduce geopolitical and trade risks amid ongoing global supply chain realignments.
India’s emerging outsourced semiconductor assembly and test industry is trying to build itself on a wider base of suppliers than the one that has long dominated the sector. Across five planned or early-stage ventures led by Tata Electronics, Micron Technology, Kaynes Semicon, CG Power’s CG Semi and the HCL-Foxconn joint venture, the common strategy is to reduce dependence on China at a time when export controls, tariff risks and geopolitical disruption have made single-country sourcing more exposed. Communicationstoday reports that typical OSAT supply chains still draw about 55% to 60% of their suppliers from China, making diversification a practical necessity as well as a strategic choice.
Tata Electronics offers the clearest example of that shift. According to LiveMint and Communicationstoday, its assembly and test plant in Jagiroad, Assam, has lined up suppliers in Singapore, the Netherlands, Japan and Malaysia, including ASMPT, Nexperia, Fujifilm and Kelington. The group’s wider semiconductor build-out also includes a fabrication project in Dholera, Gujarat, where ASML has been linked to lithography equipment and PSMC to process technology. Taken together, the two projects show how India’s chip ambitions remain heavily dependent on foreign technology, even as they move away from Chinese sourcing.
Other entrants are following similar but distinct paths. Communicationstoday says Kaynes Semicon’s Sanand plant has leaned on Japanese firms, notably AOI Electronics for advanced packaging capabilities and Mitsui as a supply-chain aggregator for Japanese raw materials, while it has also bought power-module production lines from Fujitsu and is working with IBM on packaging research. CG Semi, also in Sanand, is built around Renesas Electronics and Stars Microelectronics, with a focus on automotive-grade microcontrollers. Micron’s assembly, testing, marking and packaging site, likewise in Sanand, has already begun shipping to Dell and HP, underscoring that these plants are moving from construction to commercialisation even as supplier ecosystems remain incomplete.
Beneath those company-specific arrangements sits a much thinner industrial layer that India is still trying to create. Communicationstoday says copper lead frames are mostly imported from South Korea and the Philippines, bonding wire remains concentrated among a small number of global specialists, and epoxy moulding compounds are sourced largely from South-East Asia and need cold-chain transport. On gases and chemicals, firms such as INOX Air Products, Linde, HySpec Chemicals, Air Liquide and Fujifilm are among those being drawn into the market, while India’s semiconductor mission is also courting Applied Materials and Lam Research in a bid to localise more equipment manufacturing.
The economic challenge is just as significant as the geopolitical one. Communicationstoday says materials account for roughly 45% to 50% of OSAT production costs, while 60% to 70% of inputs are still sourced internationally. Even where local alternatives are emerging, qualification periods can run from one to two years, and longer for automotive-grade parts. CG Semi estimates that building a meaningful domestic supply layer will take at least three years, while the broader semiconductor mission has spoken of a 10- to 15-year horizon for a mature ecosystem. India is therefore diversifying risk rather than eliminating it: the new OSAT plants are spreading their sourcing, but they are still operating inside a global supply chain that remains narrow, specialised and heavily dependent on imported materials and machinery.
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