Semiconductor Industry Today: India Builds a Stronger Chip Ecosystem

India’s semiconductor industry is entering a new phase, backed by government support, private investment and new manufacturing capabilities.

The latest developments show that the country is building more than just chip-making capacity. From a proposed investment of over Rs 5 lakh crore to advanced packaging and defense-focused technologies, several areas are gaining attention.

Indian companies are also expanding their presence in global semiconductor supply chains. Together, these developments point to a broader effort to build domestic capabilities, attract investment and reduce supply chain dependence. The focus is now moving across manufacturing, packaging, materials and specialized chip applications.

Semicon 2.0 Could Drive Over Rs 5 Lakh Crore Investment

The government has notified the Rs 1.27 lakh crore Semicon 2.0 program to strengthen India’s semiconductor ecosystem. The India Electronics and Semiconductor Association, or IESA, expects the scheme to catalyze over Rs 5 lakh crore in investment. This investment could come across chip factories, packaging, equipment, materials, design and research. IESA also expects five to seven chip manufacturing units to be established over the next five to seven years. The program offers financial support for manufacturing projects and provides stronger incentives for advanced research and talent development.

Key highlights:

• IESA expects more than Rs 5 lakh crore in cumulative private and industry investment.
• Five to seven chip manufacturing units could be established over the next five to seven years.
• Manufacturing and assembly projects can receive 25-40 percent capital support.
• Research and development and talent development can receive support of up to 75 percent.

Advanced Packaging Could Give India a Faster Entry

Building a large chip factory requires billions of dollars and several years before commercial production begins. Advanced packaging could offer India a faster way to build capabilities and join the global semiconductor value chain. It allows multiple chips or components to work together inside one package, improving performance and efficiency.

India’s Semicon 2.0 program gives advanced packaging a specific focus, with projects eligible for support of up to 35 percent of capital expenditure. However, India still needs skilled workers, reliable infrastructure, suppliers and stronger local manufacturing support.

Key highlights:

• Advanced packaging can require less investment than building a leading-edge chip factory.
• The global advanced packaging market was valued at USD 20.2 billion in 2024.
• The market is projected to reach USD 39.6 billion by 2030.
• India needs stronger local supplies of materials, equipment and skilled packaging engineers.

Also Read: India as a Global Manufacturing Hub in the New Mobility Era

izmo Microsystems Develops India-Made Defense Chip Package

izmo Microsystems, a subsidiary of IZMO Limited, has developed a semiconductor package for devices operating at frequencies up to 40 GHz. The package was designed, developed and manufactured entirely in India for high-frequency defense and secure communication applications.

The company has completed testing and started production shipments for its customer. The technology could support applications such as radar, electronic warfare, aerospace and secure communications. Dinanath Soni, Director of izmo Microsystems, said the company has developed the package from design through manufacturing and validation.

Key highlights:

• The package supports semiconductor devices operating at frequencies of up to 40 GHz.
• It was completely designed and manufactured in India.
• Production shipments have already started.
• The technology targets defence, aerospace, radar and secure communication applications.

Acutaas Expands Semiconductor Materials Footprint in South Korea

Acutaas Chemicals’ step-down subsidiary, Indichem Inc, has opened a semiconductor chemicals plant in Gongju, South Korea. The facility was completed within 11 months of its groundbreaking in September 2025. The plant creates a two-country model, with chemical synthesis taking place in India and high-purity refining and testing in South Korea.

Indichem was formed in 2025 by Acutaas Advance Material Limited and South Korea-based J & Materials Co Ltd. Naresh Patel, Chairman and Managing Director of Acutaas Chemicals, said the facility will support the company’s semiconductor materials growth.

Key highlights:

• The new South Korean plant covers 16,513.7 square meters.
• Acutaas Advance Material Limited holds a 75 percent stake in Indichem.
• The company has invested around Rs 200 crore in the joint venture.
• Chemicals will be synthesized in India and refined and tested in South Korea.

Conclusion

These developments show how the semiconductor industry is expanding beyond traditional chip manufacturing in India. Government funding is helping create opportunities across manufacturing, packaging, research and supply chains. Advanced packaging could help Indian companies enter global markets without waiting for a large factory ecosystem.

At the same time, izmo Microsystems’ defense-focused development shows growing domestic capabilities in specialized electronics. Acutaas’ South Korean plant adds another link to India’s semiconductor materials supply chain. Together, these moves suggest that India’s semiconductor industry is gradually building a wider and more connected ecosystem.