Semiconductors

1. Scientific foundations and major semiconductor technologies

A semiconductor is a material whose electrical conductivity lies between that of a conductor and an insulator and can be controlled through doping, electric fields, temperature or light. Its relatively small energy band gap allows charge carriers to be generated or manipulated under suitable conditions. Silicon dominates because it is abundant, supports a useful native oxide and benefits from a mature manufacturing ecosystem.

Doping introduces controlled impurities into a semiconductor. Donor impurities produce n-type material with electrons as majority carriers, while acceptor impurities produce p-type material with holes as majority carriers. Bringing these regions together creates a p–n junction, fundamental to diodes, solar cells and many electronic devices. Transistors act as switches or amplifiers; integrated circuits combine large numbers of components on a small substrate.

Semiconductor products include logic chips that process information, memory chips that store it, analogue chips that handle continuous signals, and power devices that manage electrical energy. Microcontrollers integrate processing, memory and interfaces for embedded systems. Sensors translate physical conditions into electrical signals. Silicon carbide and gallium nitride, both wide-band-gap materials, can improve performance in electric-vehicle power electronics, charging systems, communications and renewable-energy equipment.

Smaller manufacturing nodes can improve transistor density, performance and energy efficiency, but are not essential for every application. Automotive, industrial and power-management systems frequently rely on mature nodes because reliability, voltage tolerance, cost and long product life matter more than maximum density. Thus, semiconductor capability should not be assessed only by the smallest node a country can manufacture.

2. Value chain, manufacturing and global interdependence

The semiconductor value chain begins with product architecture, intellectual-property blocks and chip design using electronic design automation software. Designs undergo verification before being converted into manufacturing instructions. A fabrication plant, or fab, repeatedly deposits, patterns, etches and modifies materials on wafers. Photolithography transfers patterns using light; extreme ultraviolet lithography is used in some advanced processes, while many established processes use other lithographic technologies.

After fabrication, wafers are tested and separated into individual dies. Assembly, packaging and testing provide electrical connections, mechanical protection and heat dissipation while screening defective devices. Advanced packaging connects multiple dies or chiplets within a package, improving functionality without relying exclusively on transistor miniaturisation. Consequently, packaging is increasingly a source of technological differentiation rather than merely a low-value final operation.

Business models differ. Fabless firms design chips but outsource manufacturing; foundries manufacture chips for other firms; integrated device manufacturers undertake both design and production. Outsourced semiconductor assembly and test firms specialise in downstream operations. ATMP refers to assembly, testing, marking and packaging, a closely related set of activities.

No country controls every segment efficiently. Taiwan has a major role in advanced contract manufacturing, South Korea in memory, the United States in design and key software, the Netherlands in advanced lithography equipment, and Japan in several materials and equipment categories. These specialisations create efficiencies but also concentrated dependencies. Capital intensity, process complexity, intellectual property and the difficulty of achieving high production yields create substantial entry barriers.

3. Strategic and societal applications

Semiconductors enable artificial intelligence, cloud computing, mobile networks, satellites, navigation, radar and secure communications. Dependence on imported chips can expose strategic sectors to supply disruption, export restrictions or compromised procurement channels. However, domestic fabrication alone cannot ensure security: trusted designs, secure firmware, traceable sourcing, testing and cybersecurity across the equipment lifecycle are equally important.

Their societal applications are extensive. Medical imaging and diagnostic equipment use specialised processors and sensors; agricultural systems use chips for soil monitoring, irrigation and remote sensing; digital payments and identity systems depend on secure computing infrastructure. Smart meters, grid controls, solar inverters and electric vehicles rely on power electronics. Affordable and reliable semiconductor access therefore supports public-service delivery, productivity and decarbonisation.

The pandemic-era chip shortage demonstrated that disruption in a specialised component can constrain entire industries. Automobile production was affected even where steel, labour and assembly capacity were available. Demand forecasting, inventory practices and limited substitutability intensified the problem. Meanwhile, subsidies, export controls and national-security screening have made semiconductor supply chains a central arena of industrial policy and geopolitical competition.

4. India’s semiconductor strategy and emerging ecosystem

India has a substantial semiconductor design and engineering talent base, but commercial wafer-fabrication capacity remains limited relative to its electronics market. Existing institutions, including the Semi-Conductor Laboratory at Mohali, provide capabilities relevant to strategic and specialised requirements. The policy objective is to deepen domestic value addition rather than treat final electronics assembly as equivalent to semiconductor self-reliance.

The December 2021 semiconductor and display programme established a ₹76,000-crore policy envelope. Under the modified programme approved in 2022, eligible semiconductor fabs can receive fiscal support of 50% of project cost. Support for eligible compound-semiconductor, sensor, discrete-semiconductor and ATMP/OSAT facilities is structured around 50% of capital expenditure. These categories should not be conflated with identical reimbursement rules for every project.

India Semiconductor Mission supports ecosystem development and project appraisal. The Design Linked Incentive scheme seeks to strengthen domestic chip-design enterprises through financial and infrastructure support. The Chips to Startup programme supports specialised manpower development. Electronics-manufacturing incentives and demand from telecommunications, vehicles and energy systems can complement semiconductor policy, but cannot substitute for process expertise and sustained research.

Approved projects illustrate a multi-segment approach. In February 2024, the Union Cabinet approved a Tata Electronics fab at Dholera, Gujarat, in partnership with Taiwan’s PSMC; a Tata assembly and testing facility at Morigaon, Assam; and a CG Power-led unit at Sanand, Gujarat. Micron’s Sanand project, announced in 2023, concerns assembly and testing rather than wafer fabrication. Announced investments, approved capacity, construction milestones and commercial output must be distinguished.

5. Implementation challenges and policy priorities

A competitive ecosystem requires uninterrupted high-quality electricity, ultrapure water, cleanrooms, specialty gases, chemicals and dependable logistics. Fabs also require experienced process engineers and technicians capable of improving yield. High upfront expenditure, rapid technological change and cyclical chip prices create commercial risks. Subsidies may attract initial investment but cannot independently generate customer confidence, operational discipline or long-term competitiveness.

Environmental governance is essential. Manufacturing consumes substantial energy and water and uses hazardous chemicals; some process gases have high global-warming potential. Water recycling, wastewater treatment, emissions abatement, renewable power and transparent resource planning should accompany industrial development. Semiconductor manufacturing waste and end-of-life electronic waste are distinct issues requiring coordinated but different regulatory responses.

India should pursue selective technological depth with diversified international partnerships rather than complete autarky. Priorities include commercially viable mature-node manufacturing, power semiconductors, advanced packaging and domestic design intellectual property. Support should be linked to verifiable milestones, skills transfer, supplier development and market demand. University–industry collaboration, access to prototyping facilities and predictable policy can help Indian firms move from design services towards globally competitive semiconductor products.

Semiconductors: From Material Properties to Strategic Capability

Semiconductors are materials whose electrical conductivity can be controlled through doping, electric fields, temperature or light. This controllability enables devices such as diodes and transistors, which rectify current, switch signals or amplify them. Silicon dominates many applications, while compound semiconductors serve specialised needs, including high-frequency communications and power electronics. The supplied metadata identifies only “semiconductor outlines”; it cannot establish a particular material, device architecture, manufacturing process or performance level.

For India, semiconductor capability requires more than a fabrication plant. The value chain spans chip design, design software, intellectual property, wafer fabrication, assembly, testing and packaging, alongside specialised materials and equipment. Fabrication demands reliable electricity, ultrapure water, contamination control and skilled personnel; packaging and testing also require sophisticated engineering. Strategic resilience therefore means addressing critical dependencies and building trusted supply relationships, rather than assuming complete domestic self-sufficiency. Policy evaluation should consider commercial viability, infrastructure, skills, environmental management and sustained technological upgrading, not merely announced investments.

• Distinguish material, device and product: silicon is a semiconductor material; a transistor is a device; an integrated circuit combines interconnected devices.
• A smaller process-node label does not automatically mean the best chip for every use. Automotive, industrial and power applications may prioritise reliability, voltage tolerance and cost.
• Design strength does not equal manufacturing capacity. Assess fabrication and assembly, testing and packaging separately; this image metadata provides no evidence of either capability.

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