Prime Minister Narendra Modi opened SEMICON India 2026 in New Delhi on September 17. His message was direct: India's semiconductor manufacturing journey is moving from "files to factories." Hours later, Applied Materials backed that claim with capital, announcing a $5 billion investment through 2035.
The timing isn't coincidental. Rising AI-driven chip demand is forcing India to ask a harder question than how many chips it can make: how much of the supporting semiconductor ecosystem can it actually build at home, strengthening India's position in global supply chains.
In this article, we have covered PM Modi's remarks on India's semiconductor growth, Applied Materials' USD 5 billion Vision 2035 commitment, the semiconductor equipment and supplier ecosystem India still needs, and what separates investment announcements from real manufacturing capability.
PM Modi highlighted that the global semiconductor market has grown over 20 percent in two years, driven by AI infrastructure demand. AI data centres run thousands of high-performance processors in parallel, reshaping demand for chips, packaging and power capacity together. Modi cited India’s expanding transmission network and 7.8 percent GDP growth as complementary strengths supporting the country’s semiconductor ambitions.
This matters for manufacturing specifically because AI-driven demand doesn't just mean more chips — it means more demand on fabrication equipment, specialty materials and packaging lines feeding chip production. Countries without depth here risk becoming assembly points, not value-adding hubs.
Also Read: How Silicon Anodes Could Reshape India's EV Battery Market
Applied Materials President Prabhu Raja announced "India Vision 2035" — a USD 5 billion investment over the next decade. It rests on three pillars:
The company will build a 140-acre semiconductor research park with cleanroom capabilities and shared R&D space for customers and suppliers. Applied Materials plans to grow India-based supply chain capacity tenfold by 2035. Its India workforce has grown fourfold in a decade, past 7,000 employees.
Lam Research separately announced a roughly Rs 10,000 crore facility for its first India silicon-component plant. Lam Research COO Sesha Varadarajan called this a "very critical moment," with AI driving new demand.
This is where India's gap is widest. Chip manufacturing spans design, IP, electronic design automation, semiconductor materials, equipment, wafer fabrication, assembly, testing and packaging. India has built out only a few of these links so far.
Fab Economics CEO Danish Faruqui estimates India may need close to USD 80 billion in incentives through 2035 to localize this ecosystem, as a single fab typically depends on over 200 ecosystem partners for consumables and process support - far more than one investment can deliver alone.
India's real strength lies elsewhere for now: nearly 20 percent of the global semiconductor design workforce. Policy should convert that into ecosystem depth, not treat it as a substitute.
India’s Semiconductor Mission has approved around 13 projects across chip fabrication, packaging and compound semiconductors. Building on this foundation, the government’s Semicon 2.0 roadmap focuses on six key areas: chip design, semiconductor machinery and materials, fabs, advanced packaging, R&D and talent development.
The initiative targets 200 chip-design startups and aims to train approximately one lakh engineers, strengthening India’s capabilities across the semiconductor value chain.
Whether Applied Materials’ commitment translates into lasting manufacturing value will depend on supplier readiness, workforce depth and the ability of domestic firms to qualify for global supply chains through technological development and not merely operate alongside them.
We use cookies to ensure you get the best experience on our website. Read more...
