India is ramping up multi-billion-dollar investments to transform itself into a global hub for chip manufacturing, while consciously stepping away from the path taken by the world's largest manufacturers chasing the most advanced processors for the artificial intelligence market. The country has already established a strong foothold in semiconductor design and now intends to build out its own manufacturing industry, becoming a reliable supplier to the global market. This bet on "mature" technology nodes, rather than the race for minimum dimensions, is becoming a hallmark of India's semiconductor strategy.
Public Demonstration of Ambition
Delhi's ambitions were publicly outlined at the Semicon India exhibition in New Delhi in September, when Prime Minister Narendra Modi promoted India as an alternative chip manufacturing site amid surging demand and escalating global supply chain issues. According to him, "the world needs new and reliable locations for chip production" and India is preparing for this role. A month earlier, in his Independence Day speech, Modi named the development of the semiconductor industry a key element of the "Make in India" initiative, emphasizing that "chips are indispensable" and without them the world would grind to a halt.
Mature Nodes as an Entry Point
While Taiwan's TSMC and South Korea's Samsung compete to build increasingly miniature processors, including 2-nanometer chips for high-performance computing and AI, India has focused on established technologies—so-called mature technology processes with norms ranging from 28 to 180 nanometers. According to Neil Shah of Counterpoint Research, these nodes account for nearly 70% of global chip production by volume. Even in the AI era, such chips remain critical: data centers cannot function without power management chips and networking components, and automotive, industrial, and consumer electronics continue to rely on mature nodes.
Why Not 2nm
The reason for abandoning cutting-edge nodes is economics. According to the government think tank NITI Aayog, building a modern plant to produce 3-nanometer chips will cost over 15 billion dollars, and production requires specialized equipment and decades of accumulated expertise. S. Krishnan, Secretary of India's Ministry of Electronics and Information Technology, frankly admitted that adopting the 2-nanometer process is too costly. According to Dinal Shah, co-founder of startup Indiesemic, choosing mature nodes is "one of the smartest and most forward-looking decisions" India has made.
The Foundation is Already Laid
India is no newcomer to the industry: the country hosts nearly a fifth of the world's chip design specialists, as well as major R&D centers for Intel, Qualcomm, and Texas Instruments, and Indian engineers have contributed to designing complex chips used worldwide. However, the bulk of actual manufacturing takes place abroad—according to NITI Aayog estimates, imports cover 90% to 95% of India's semiconductor needs, and it is precisely this gap between design and manufacturing that the country intends to close.
The Market and Risk Horizon
The market for mature nodes, despite living in the shadow of AI chips, is showing steady growth. In June, research firm TrendForce reported that surging demand for semiconductors for AI infrastructure is leading to a capacity crunch and could push prices up through 2027. For India, this creates a window of opportunity: specialization in mature processes, specialized semiconductors, and traditional assembly and testing looks like the only commercially viable scenario for a quick entry into the global supply chain.
