Chip war exposes India’s semiconductor vulnerabilities, industry leaders say

As geopolitical tensions reshape the global semiconductor industry, India needs to develop its own technology capabilities, reduce critical supply-chain dependencies, and build resilience through international partnerships, industry leaders said at a panel discussion on ‘The Chip War: Technology, Geopolitics and India’s Challenges’ at the Semiconductor Summit 2026 in Chennai.The panellists said India needed to identify areas where it could develop technologies of its own while building domestic manufacturing capabilities and diversifying sources of supply, as countries increasingly seek to secure access to semiconductor technologies, materials and manufacturing capacity.Sharat Kaul, India representative of the International Electronics Manufacturing Initiative (iNEMI), said the country should not dismiss outsourced semiconductor assembly and testing (OSAT) projects as an inadequate starting point. Semiconductor manufacturing requires specialised equipment, materials, talent and infrastructure, making it necessary to build the ecosystem progressively. “We have to crawl before we walk. We have to walk before we run,” he said.Mr. Kaul said semiconductor sovereignty did not mean producing everything domestically.“Sovereignty doesn’t necessarily mean that we do everything ourselves. It means that we build reliance and resilience. A bigger part is really resilience,” he said, citing the importance of maintaining multiple supply-chain options through partnerships with friendly nations.He also identified advanced packaging, which integrates multiple chips on a single substrate, as an opportunity for India to narrow its technological gap with established semiconductor manufacturing countries.“The tipping point in the industry is going to be advanced packaging,” he said, pointing to the potential of two-and-a-half-dimensional and three-dimensional technologies amid geopolitical tensions and efforts by countries such as the United States to bring advanced manufacturing within their borders.India needs own manufactureSandeep Garg, chief executive officer and board member of Indichip Semiconductors, said India needed to manufacture semiconductor devices required by its own industries instead of relying on imports.“The time has come for manufacturing and we have to manufacture our own devices,” he said.Drawing on his industry experience, Dr. Garg said major semiconductor companies had not established fabrication facilities in India despite being present in the country for decades. India needed to create greater domestic value addition rather than assume its large market alone would attract manufacturing investment, he argued.Indichip is setting up an integrated device manufacturing facility covering fabrication, assembly and testing, and final modules, with an investment of more than ₹15,000 crore, he said. The company focuses on silicon carbide power devices used in sectors including energy, electric mobility, railways, defence and data centres.Dr. Garg estimated that India’s silicon carbide market could grow from about ₹13,000 crore in 2030 to ₹1 lakh crore by 2035.However, domestic manufacturing faces gaps in essential inputs. A silicon carbide fabrication facility uses 37 gases, of which India produces only four, while it requires 42 chemicals, most of which are not manufactured domestically, he said.Dr. Garg called for the semiconductor sector to be granted industry status and for the government to address the goods and services tax burden on supporting ecosystem players. With semiconductor manufacturing projects taking three to five years, he wondered how suppliers could absorb the tax burden during the long lead time.Materials, supply chains key concernsRavi Bhatkal, vice-president of strategy at MacDermid Alpha Electronics Solutions, said India needed to develop domestic capabilities in mining, refining and materials production while securing supplies from multiple countries for inputs it could not produce locally.“The policy or the strategy, I would say, that makes most sense is a belt-and-suspenders approach,” he said.Mr. Bhatkal said government policy on localising materials and equipment was moving in the right direction, but execution would be crucial. He also highlighted recycling, or “urban mining”, as a way to recover materials already in circulation and reduce dependence on fresh supplies.He called for greater investment in research and closer links between universities, research institutions, industry and government.“One of the most understated sources of technology are the key universities that we have here,” he said.Skills gap extends beyond chip designYogan Senthilkumar, chief technology officer of iVP Semiconductor, said semiconductor education needed to extend beyond chip design to manufacturing, assembly, testing, materials and equipment.Government initiatives such as the ‘Chips to Startup’ programme had helped institutions access electronic design automation tools, but students also needed practical experience designing chips and evaluating their performance in actual silicon, he said.“The actual success of producing engineers in these domains happens when they design a chip and they see the silicon and see how it performs,” he said.Mr. Senthilkumar called for curricula to cover mechanical and chemical engineering, materials safety, industrial gases and pollution control. He said India could not prevent all semiconductor talent from moving overseas, but could train engineers to serve domestic industry and global demand.“My CEO used to say: design for India, manufacture in India and consume in India,” he said.Dr. Garg also highlighted gaps in expertise needed to build and operate fabrication facilities, including clean rooms, water systems, air-conditioning and project management. India needed to develop these capabilities locally while drawing on international expertise where necessary, he said.Can India compete with less capital?The panellists also discussed whether India could compete with countries investing substantially more capital in semiconductors.Mr. Kaul said India could draw on its experience in space technology and digital payments, as well as its software expertise and ability to develop cost-effective solutions.“We have demonstrated over and over again that we can solve the toughest problems at 1/10 the cost of the Western world,” he said.India needed to identify areas where it could establish competitive advantages while understanding the supply-chain vulnerabilities exposed by geopolitical rivalries, he added.