While India has taken major leaps forward in establishing a domestic semiconductor footprint, a research report by Equirus Securities highlights that the country’s primary challenge is execution, heavily constrained by an upstream dependency where over 90% of chip-making equipment must still be imported.

The report underscores that while India’s overarching blueprint—the India Semiconductor Mission (ISM)—is highly credible, the physical buildout faces massive localized supply chain gaps.

1. Upstream Bottlenecks: The Import Reality

The biggest structural weakness in India’s chip-making ambitions lies in its reliance on foreign ecosystems for specialized tools and raw materials:

  • The 90% Equipment Wall: For the foreseeable future, India will continue to import more than 90% of its semiconductor manufacturing equipment (such as photolithography and metrology machines).
  • Chemicals and Gases: The dependency extends beyond machinery; India is projected to import 85% to 90% of all specialty chemicals and electronic-grade gases required to run cleanrooms.
  • The Maturity Node Focus: Because of these hardware limitations and the lack of advanced sub-7nm capability, India is focusing its strategy on mature nodes between 28nm and 110nm. While these are highly utilized in the automotive and consumer electronics sectors, they remain legacy tiers by frontier global standards.

2. The Talent Paradox: Brilliant Designers, No Technicians

India possesses an unassailable advantage in software and architectural layout, but lacks the blue-collar operational talent needed to run heavy silicon manufacturing:

  • The Design Pool: India houses nearly 300,000 chip designers, representing roughly one-fifth (20%) of the entire global design talent pool.
  • The Factory Floor Void: Despite this immense intellectual capital, there is a critical deficit of process engineers, cleanroom technicians, metrology specialists, and yield engineers required to physically fabricate wafers.
  • The 20-Year Horizon: The report notes that India is essentially in “year five of a twenty-year build”. While the government’s target to train 85,000 industry-ready engineers by 2027 is ambitious, it faces a steep execution hill.

3. Ground Realities vs. Multi-Billion Dollar Approvals

Despite upstream supply chain headwinds, the financial commitment behind the domestic push remains massive, with over $21 billion in semiconductor projects already approved:

Plaintext

[ INDIA'S ACTIVE SEMICONDUCTOR PIPELINE ]

├── Micron Technology ──► Advanced DRAM/NAND packaging (ATMP) plant in Sanand, Gujarat
├── CG Semi           ──► Commercial OSAT facility producing up to 20 crore units initially
└── Tata-PSMC JV      ──► Constructing an $11 Billion fabrication plant in Dholera (28nm)

(Sources: Equirus Report, CG Semi Release)

Ultimately, the Equirus report concludes that India’s strategy is fundamentally sound because it successfully cobbles together the best traits of existing chip nations—Taiwan’s R&D model, Malaysia’s FDI packaging draw, and Singapore’s capital discipline. However, until a localized ecosystem for upstream equipment and materials is incentivized, India will remain highly exposed to global procurement cycles.

Get the day’s top stories in your inbox

One concise email. No spam, unsubscribe anytime.