India’s semiconductor dream: Failed proposals & outdated SCL(2006-2022)

The Indian government is now investing heavily in the semiconductor industry. However, it will take many years for India to catch up to the rest of the world. In the meantime, India will continue to rely on imports for its semiconductor needs.
Share this STORY


The semiconductor industry stands as the bedrock of modern technology, driving innovations that have transformed society. Yet, India’s path towards establishing a robust semiconductor manufacturing industry has been fraught with challenges and missed opportunities. While the early 1980s saw India’s Semiconductor Complex Limited (SCL) enjoying a brief advantage, the subsequent decades witnessed a series of setbacks that hindered the nation’s ambitions in this critical sector.

India’s semiconductor dream: Burnt with SCL (1984-2006)

Early Advantage and Fading Prospects:

In the early 1980s, India found itself in a unique position, with an advantageous head start in the semiconductor industry. At the time, global competitors like Taiwan and China were yet to make significant inroads into this sector. SCL leveraged this advantageous gap, benefiting from more affordable equipment and favorable economic conditions. However, even before the unfortunate 1989 fire incident, the seeds of financial strain were being sown.

semiconductor SCL attempt to scale down to 800 nanometers, while ambitious, was not without its challenges. The financial burden led to the shelving of the BBC Acorn Computer project, signaling the beginning of difficulties that would eventually plague the organization. A concerning trend emerged as talented SCL personnel sought better opportunities in the private sector or abroad, resulting in a drain of critical expertise and weakening the organization’s competitive position.

Follow us on Linkedin for everything around Semiconductors & A

Capital Hurdles and the Fab Conundrum:

The cornerstone of a successful semiconductor manufacturing industry lies in massive capital investments. India’s endeavor to establish competitive fabs faced a daunting challenge as the costs escalated with each technological advancement. The shift to increasingly advanced nodes, marked by the 14nm generation, brought manufacturing costs to unprecedented levels. This financial burden posed a significant challenge even for India’s largest corporations, like Tata and Reliance, making the investment proposition increasingly difficult to justify.

HSMC’s Halted Ambitions:

One of the pivotal moments in India’s semiconductor pursuit came in 2014 when two potential investor groups proposed the construction of semiconductor fabs with a combined estimated cost of $10 billion. The first consortium, comprising Jai Prakash or JP Associates Ltd, TowerJazz, and IBM, aimed to pool their resources to create a robust semiconductor manufacturing ecosystem within India’s borders.

Simultaneously, the second consortium, Hindustan Semiconductor Manufacturing Corporation (HSMC), a 100% state-owned enterprise, held great promise. HSMC leveraged chip-making expertise from European STMicroelectronics and Malaysian state-operator Silterra Corporation. However, the journey towards semiconductor self-sufficiency proved complex, and HSMC faced challenges that eventually led to the cancellation of its letter of intent in 2019, underscoring the importance of commitment and tangible progress in such ambitious projects.

JP group pulled out of the project stating that the company has a lot of debt & semiconductor plant is not commercially viable at the moment. Indian govt canceled HSMC’s 2-year-old letter of Intent due to their failure to submit documents for demonstration of commitment towards the stated Objective. 

Apple’s Strategic Moves:

In a parallel narrative, global technology giant Apple recognized the growing importance of the Indian smartphone market. Despite facing challenges due to comparatively high product prices, Apple embarked on a strategic journey to establish a stronger presence in India. This journey led to key collaborations with manufacturers such as Foxconn, Wistron (partnered with Tata), and Pegatron.

These collaborations represent a substantial investment of approximately $880 million, aimed at increasing smartphone production within India’s borders. Apple’s strategic partnerships align with the ‘Make in India’ initiative and exemplify the importance of synergistic efforts between global players and local manufacturing ecosystems.

SCL’s Niche Progress and Collaborations:

While the semiconductor industry’s leading edge continued to advance, SCL announced a significant milestone – the ability to accept designs at the 180nm node. This accomplishment may not represent cutting-edge technology, but it is a crucial step in nurturing domestic semiconductor capabilities.

SCL’s collaboration with academia, exemplified by its partnership with IIT Madras to fabricate SHAKTI processors using the 180nm technology process, highlights a synergistic approach to innovation.

Design Capabilities and Global Presence:

Amidst the manufacturing challenges, India’s prowess in chip design emerged as a noteworthy strength. The separation of chip design and manufacturing since the mid-1980s enabled India to focus on honing its design capabilities. Tens of thousands of Indian engineers actively contribute to VLSI design, with their chips being successfully fabricated in leading-edge fabs across the globe. This focus on design innovation has positioned India as a key player in chip development and has earned it a reputable presence in the global semiconductor ecosystem.

In 2019, India imported $21 billion worth of semiconductors according to the India Electronics and Semiconductor Association. This number is growing at about 15% a year.

Current Challenges and Geopolitical Concerns:

As of today, India faces a stark reality with minimal domestic semiconductor fabrication capacity. The reliance on chip imports, while sustainable in the short term, leaves the country vulnerable to supply chain disruptions. The global semiconductor shortage in 2020 highlighted the fragility of this dependency. India’s status as the world’s second-largest smartphone manufacturer underscores the risks associated with lacking a robust domestic chip manufacturing infrastructure.

Moreover, the geopolitical dimension adds further urgency to India’s semiconductor quest. A significant portion of India’s chip imports, approximately 37% in 2019, originate from China. Given the tense Sino-Indian relations, this reliance on a geopolitical adversary for critical technological components raises concerns about national security and autonomy.

India is a 100% imported semiconductor country, whose imports stood at $21B.
The electronics and semiconductor Association expects this number to go up to 15% by end of 2022.


India’s journey in semiconductor manufacturing reflects a complex tapestry of challenges, hopes, and unfulfilled promises. While the nation has excelled in chip design and innovation, the absence of a thriving domestic fabrication industry poses significant risks to its technological sovereignty. Establishing a self-sufficient semiconductor manufacturing ecosystem demands unwavering commitment, long-term vision, and substantial financial investments from the highest echelons of governance. The road ahead is arduous, but it is essential for India to chart a course towards semiconductor self-sufficiency, safeguarding its technological future and reducing vulnerabilities in an increasingly interconnected world.

Share this STORY