India’s Semiconductor Mission: Building Technological Sovereignty in the Age of AI

Semiconductors have emerged as one of the most consequential strategic technologies of the 21st century. They are no longer merely components used in computers and mobile phones. They are the foundation of artificial intelligence, telecommunications, electric mobility, defence systems, satellites, automobiles, data centres and advanced manufacturing.

For India, therefore, semiconductor capability is increasingly a question of economic competitiveness, technological sovereignty and national security.

The launch of Semicon India 2026 and the government's next-generation Semicon 2.0 programme have brought this issue into sharper focus. Semicon 2.0, approved in July 2026 with an outlay of ₹1,27,500 crore, seeks to move India's semiconductor ecosystem beyond basic fabrication and packaging towards a broader value chain encompassing design, research and development, machinery, materials, fabrication, advanced packaging and talent. Press Information Bureau

From electronics consumption to semiconductor capability

India has emerged as a major electronics manufacturing and consumption market. However, manufacturing electronic products and possessing semiconductor capability are not the same.

A smartphone assembled in India may contain chips designed in one country, fabricated in another, packaged elsewhere and incorporated into a final product in India.

This illustrates the complexity of the global semiconductor value chain.

The concentration of semiconductor production in a limited number of geographical locations has exposed the world to supply-chain risks arising from geopolitical tensions, natural disasters and trade restrictions. The strategic importance of diversification has therefore increased considerably. Press Information Bureau

India's semiconductor strategy must consequently be understood as an attempt to build resilient domestic capabilities while becoming an important node in global value chains.

Why semiconductors matter for national security

Modern military systems depend extensively on sophisticated electronics.

Radar systems, satellites, missiles, communication networks, electronic warfare systems and unmanned platforms require advanced semiconductor components.

A disruption in semiconductor supplies can therefore affect not only consumer electronics but also defence preparedness.

This has produced a new understanding of economic security: control over critical technologies and supply chains can have consequences comparable to traditional strategic resources.

Semicon 2.0: From fabs to an ecosystem

One of the important features of Semicon 2.0 is its broader approach.

The programme identifies six major areas:

• chip design;
• machines and materials;
• semiconductor fabrication;
• ATMP/OSAT and advanced packaging;
• research and development;
• talent.

This is significant because a semiconductor ecosystem cannot be created by establishing fabrication plants alone.

A successful industry requires:

Design → EDA tools → materials → equipment → fabrication → packaging → testing → system integration → skilled workforce.

India already possesses considerable strengths in semiconductor design and engineering talent. The next challenge is to translate this human-capital advantage into greater domestic value creation.

The AI connection

The semiconductor question has become even more important because of Artificial Intelligence.

Large AI systems require enormous computing capacity. High-performance processors and AI accelerators form the hardware foundation of this computing revolution.

Thus, India's AI ambitions and semiconductor ambitions are closely interconnected.

A country seeking technological leadership in AI cannot remain permanently dependent on external sources for the underlying computing hardware.

The emerging relationship can be represented as:

Semiconductors → Computing → AI → Data Centres → Digital Economy

Consequently, semiconductor policy is also becoming an AI policy.

India's challenges

India's semiconductor journey nevertheless faces major challenges.

The first is capital intensity. Fabrication plants require enormous investment and sophisticated infrastructure.

The second is technology. Semiconductor manufacturing involves extremely complex processes, specialised materials and precision equipment.

The third is water and energy requirements. Semiconductor manufacturing requires reliable utilities and highly controlled production environments.

The fourth is talent. India has a large engineering workforce, but advanced fabrication, equipment engineering and semiconductor materials require specialised expertise.

The fifth is global competition. Taiwan, South Korea, China, Japan, the United States and Europe possess deeply established semiconductor ecosystems.

India therefore cannot compete merely through subsidies.

It must compete through reliability, skilled manpower, infrastructure, research, intellectual property and integration with global supply chains.

The way forward

India should focus on five priorities.

First, semiconductor policy must integrate research and industry. Universities should become active participants in chip design, materials research and fabrication technology.

Second, India must strengthen domestic intellectual property rather than limiting its role to assembly and manufacturing.

Third, semiconductor manufacturing should be connected with India's strengths in automobiles, telecommunications, defence, space, electronics and artificial intelligence.

Fourth, India needs long-term investments in precision engineering, semiconductor equipment and materials.

Finally, the country must build a sustained talent pipeline rather than treating skilling as a short-term programme.

Conclusion

The semiconductor race is ultimately not only a race to manufacture chips. It is a race to control the technologies that will shape the next phase of economic and strategic power.

Semicon 2.0 provides India with an opportunity to move from being primarily a large consumer and electronics manufacturer towards becoming a meaningful participant across the global semiconductor value chain.

For India, semiconductor self-reliance should not mean isolation from global supply chains. It should mean possessing enough domestic capability to participate in those supply chains from a position of technological strength.