India launches third semiconductor plant, targets five billion chips a year

India's third semiconductor manufacturing facility at Sanand in Gujarat launched its commercial production on 4 July when Prime Minister Narendra Modi announced that the facility has set a target to produce five billion chips every year.

"I am told that 200 million chips will be produced here annually. Not 20 lakh, but 20 crore. And I am told you will not stop here. You have set a target of 5 billion chips annually - more than 15 million chips every single day. I am confident you will achieve this soon," Modi said, adding "this is further proof that the semiconductor programme "is gaining momentum, step by step, brick by brick and now chip by chip."

Modi's remarks encapsulate the promising start of India's semiconductor journey to create an ecosystem at a time when the country is accelerating its efforts to develop a domestic chip industry amid trade restrictions linked to US-China technology rivalry.

The semiconductor manufacturing plant in Sanand is the third in Modi's home state this year. He had earlier launched the country's first and second semiconductor plants in Gujarat on 28 February and 31 March this year.

Of the 12 semiconductor projects approved by the Indian government, two more are set to be inaugurated in the coming months and with this five semiconductor plants are expected to be operational across the country by this year-end.

India has held out the promise of forking out billions of dollars in subsidies to attract semiconductor plants and related manufacturing as a part of Modi's wider push to build more products locally.

The Sanand facility's groundbreaking was held on 13 March 2024, with an investment of over Rs 7,600 crore and it was built in partnership with Renesas Electronics, Japan, giving India access to global semiconductor technologies, manufacturing practices and quality systems.

Chips manufactured at Sanand will cater to automobiles, scooters and industrial equipment domestically and also be exported to Japan, the United States and Europe, positioning India as a contributor to the global semiconductor supply chain.

Semiconductors now constitute the bedrock of national security, economic resilience, technological sovereignty and future competitiveness, covering a range of areas from defence systems, telecom networks and AI infrastructure to automobiles, healthcare devices, digital public infrastructure and advanced manufacturing.

India's first front-end semiconductor fabrication plant is coming up in Dholera, Gujarat. Tata Electronics and leading Dutch semiconductor company ASML are developing the plant with an investment of $11 billion, aimed at producing chips for applications ranging from automotive and mobile devices to AI.

In fact, Dutch semiconductor firms are scouting for new markets and geographical diversification amid export controls and trade restrictions linked to US-China rivalry in the sector.

"India's rapidly expanding semiconductor sector represents many compelling opportunities, and we are committed to establishing long-term partnerships in the region," ASML CEO Christophe Fouquet said.

US chipmaker Intel and 3DGS Inc. USA, will invest about $3.3 billion to set up a substrate manufacturing plant in the eastern state of Odisha.

The plant is planned to be set up over five to six years and will focus on advanced packaging glass core substrates, high-density interconnect substrates and associated semiconductor technologies.