India banks on mature-node chips to build semiconductor niche

India is eyeing a place in the global chip race, but with a different strategy. Rather than chasing the cutting-edge technology led by TSMC, Samsung and Intel, New Delhi is focusing on mature-node manufacturing in the 28nm to 65nm range. Prime minister Narendra Modi revealed the country’s plans in his recent Independence Day address, announcing six semiconductor units already underway and four new projects recently approved.

The government’s Semicon India programme, launched in 2021 with a budget of $8.7bn, has already cleared 10 projects across six states. Recent approvals in Odisha, Andhra Pradesh and Punjab have pushed total investments to $18.3bn. The programme provides production-linked incentives to promote domestic manufacturing of electronic components and semiconductors.

Big names are already on board, with Tata Electronics in Gujarat and Assam; Foxconn and HCL Group in Jewar; CG Power-Renesas in Gujarat; and Micron’s assembly, test, manufacturing and packaging (ATMP) facility in Gujarat. Modi has pledged that India-made chips will be commercially available by the end of 2025.

By focusing on mature-node manufacturing, India is plugging a supply chain gap while building the skills and infrastructure it needs for the long run. Analysts say the move not only supports self-reliance, but could also fuel growth in homegrown fabless firms.

Galen Zeng, senior research manager at IDC Asia-Pacific, said moving upstream into semiconductor manufacturing would be beneficial to India at a time when global demand remains strong, driven by the growing adoption of electric vehicles and autonomous driving that rely on mature chips for microcontrollers and sensors.

Kanishka Chauhan, senior principal analyst at Gartner, concurred, noting that while mature chips have often been seen as commoditised, low-margin products, their growing importance in automotive, industrial and high-performance computing sectors is likely to drive volume growth and make it a profitable venture.

The toughest challenge for India’s chip push, however, is pricing pressure from Chinese foundries, where costs are already more than 10% lower, warned Zeng. Also, unlike advanced fabs, mature-node plants are cheaper to set up and quicker to pay back, but that also means easier entry for rivals.

Chauhan highlighted the need for better planning and strategic partnerships to avoid oversupply. “By adopting a high-mix, low-volume model and dynamically switching production, fabs can respond swiftly to market demand and avoid flooding it with commoditised chips,” he said.

As companies reconsider their reliance on China amid shifts in the global supply chain, New Delhi is working to prove it can be a trusted partner as it fleshes out its semiconductor ambitions. By focusing on high-volume mature-node chips, India has the potential to deliver reliability and cost-effectiveness without rushing to compete in the cutting-edge 3nm space.

But in the long run, mature-node manufacturing is about more than just expanding capacity, reducing imports and boosting exports. Chauhan said its real value lies in establishing India as a hub for supply chain resilience. “With rising geopolitical tensions, India’s proactive efforts to de-risk supply chains will make it more attractive to global industries,” he added.

According to a report by the India Electronics and Semiconductor Association and Counterpoint Research, India’s semiconductor component market is expected to grow to $300bn by 2026, driven by the growing local and global demand for semiconductors used in mobile devices, wearables, electric vehicles and robots.