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

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Updated - October 27, 2026 06:36 pm IST - Chennai

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.

Sandeep 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.

Ravi 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.