'India has entered 2nd phase of semiconductor journey': PM Modi at Semicon event
At the inauguration of SEMICON India 2026 (17–19 September, New Delhi), the government stated that the country has moved into the "second phase" of its semiconductor journey — a shift from building fabrication and design capability to actual commercial chip production.
The government announced an expanded outlay for the India Semiconductor Mission's second phase (ISM 2.0) — reported at roughly $13.5 billion, compared with $8 billion committed in the first phase.
Twelve semiconductor manufacturing projects now stand approved under the Mission, of which three assembly-and-test facilities are already in commercial production, alongside continued emphasis on expanding semiconductor infrastructure and building a talent pipeline for the sector.
The event, themed "Silicon to Systems: Building the Ecosystem," drew over 600 exhibitors — around 300 international companies — and delegations from more than 40 countries, reflecting rising global industry engagement with India's chip ecosystem.
Fab vs OSAT/ATMP: What "Commercial Chip Production" Actually Means
India's current semiconductor production milestones are concentrated in Outsourced Semiconductor Assembly and Test (OSAT), also called Assembly, Testing, Marking and Packaging (ATMP) — not front-end wafer fabrication ("fabs"). A fab etches circuits onto silicon wafers using advanced lithography; an OSAT/ATMP unit takes fabricated dies (largely imported in India's current ecosystem) and packages, tests, and marks them into finished chips. This distinction matters for evaluating how far India has moved up the value chain.
Key Details
- Micron's Sanand (Gujarat) facility, inaugurated in early 2026, is an OSAT unit — India's first large-scale commercial semiconductor assembly-and-test site, initially assembling and testing tens of millions of chips with plans to scale to hundreds of millions annually.
- Tata Electronics' fab under construction at Dholera, Gujarat (in partnership with Taiwan's PSMC) is intended to be India's first commercial silicon wafer fab — a distinct, more advanced stage than OSAT/ATMP.
- The India Semiconductor Mission (ISM) supports four categories of units: silicon/display fabs, compound semiconductor and sensor units, ATMP/OSAT facilities, and chip-design incentives — with fiscal support of up to 50% of project cost for fabs and ATMP/OSAT units.
The government's framing of a shift "from capability development to actual commercial chip production" reflects that OSAT/ATMP output has begun at commercial scale, even as India's first full wafer fab is still under construction — an important nuance for assessing genuine indigenisation versus assembly-stage participation in the global chip supply chain.
India Semiconductor Mission (ISM) 2.0: Outlay and Institutional Structure
The India Semiconductor Mission was approved by the Union Cabinet in December 2021 with a financial outlay of ₹76,000 crore, housed as an independent business division of the Digital India Corporation under the Ministry of Electronics and Information Technology (MeitY), with delegated administrative and financial powers to appraise and approve semiconductor and display fab proposals. ISM 2.0, unveiled around SEMICON India 2026, substantially enlarges this outlay to roughly $13.5 billion (about ₹1.1–1.3 lakh crore), continuing support for fabs and ATMP/OSAT units while placing greater emphasis on chip design, equipment and materials, and workforce development.
Key Details
- ISM Phase 1 outlay: ₹76,000 crore (approved December 2021); ISM 2.0 outlay: approximately $13.5 billion, versus $8 billion committed under Phase 1.
- Twelve semiconductor manufacturing projects stand approved under the Mission as of September 2026, spanning fabs, compound-semiconductor units, and ATMP/OSAT facilities across multiple states, chiefly Gujarat and Uttar Pradesh.
- ISM 2.0 is organised around chip design, semiconductor equipment and materials, fabrication, advanced packaging, research and development, and talent development as its focus pillars.
The scaled-up outlay and broadened focus areas announced at SEMICON India 2026 are the institutional mechanism through which the government intends to convert the "capability" built in Phase 1 into sustained "commercial production" in Phase 2.
Semiconductor Talent Development and the Skilling Ecosystem
Because semiconductor fabrication and design require highly specialised engineering skills (VLSI design, cleanroom fabrication processes, packaging engineering) that India's mainstream engineering curriculum has not traditionally emphasised, the government has paired capital incentives for fabs with dedicated human-capital programmes, recognising that a chip ecosystem cannot scale on infrastructure investment alone.
Key Details
- The Chips to Startup (C2S) programme, run alongside the ISM, aims to train several hundred thousand engineers in semiconductor design over the Mission period through partnerships with academic institutions and industry.
- Talent development is formally listed as one of ISM 2.0's core pillars alongside design, equipment/materials, fabrication, packaging, and R&D — a broadening from Phase 1's near-exclusive focus on anchoring fab investment.
- Skilling initiatives are intended to reduce India's historical dependence on importing semiconductor engineering talent and to support the "design" segment of the value chain, where India already has an established base of multinational chip-design centres.
The government's emphasis on "nurturing young talent" at the SEMICON India 2026 event signals that workforce readiness, not just factory construction, is now treated as a binding constraint on sustaining commercial-scale chip production.
- India Semiconductor Mission (ISM) approved by the Union Cabinet: December 2021, outlay ₹76,000 crore, under MeitY via the Digital India Corporation.
- ISM 2.0 outlay announced around SEMICON India 2026: approximately $13.5 billion, up from $8 billion in Phase 1.
- Twelve semiconductor manufacturing projects approved under the Mission; three assembly/test (OSAT) facilities already in commercial production as of September 2026.
- SEMICON India 2026 (17–19 September, New Delhi): over 600 exhibitors, about 300 international, delegates from 40+ countries.
- Fiscal support under ISM: up to 50% of project cost for fabs and ATMP/OSAT units.