[Answered] Critically analyze the strategy that India should prioritize manufacturing local market-serving semiconductor chips over the most advanced ones. Justify its impact on ‘Atmanirbhar Bharat’.

Introduction

India’s semiconductor consumption reached $23.2 billion in 2023, yet imports met over 95% of demand. Prioritizing indigenous, market-serving chip manufacturing can drive Atmanirbhar Bharat, technological sovereignty, and sustainable industrial transformation.

India’s Semiconductor Landscape and Strategic Context

Global Semiconductor Dynamics

1. The semiconductor value chain is concentrated—Taiwan (TSMC) dominates advanced nodes (3–7 nm), while China, Malaysia, and Vietnam focus on mid-range and mature nodes (28–90 nm).

1. According to McKinsey (2023), 70% of global semiconductor demand comes from “mature nodes” catering to automobiles, IoT, defence, and industrial applications—precisely India’s growing markets.
2. Thus, localising such chips aligns with India’s consumption profile and industrial needs rather than chasing frontier technology controlled by a few global leaders.

India’s Demand-Driven Opportunity

1. India’s domestic chip demand is projected to exceed $80 billion by 2028, driven by EVs, 5G devices, defence electronics, and consumer durables.
2. PLI Scheme (₹76,000 crore) under the Semicon India Programme aims to create fabrication and packaging ecosystems for mature node chips (28–65 nm).
3. The Micron ATMP facility in Gujarat (2023) and Tata’s upcoming fab in Dholera mark India’s first major steps in this direction.

Why Prioritise Market-Serving Chips Over Advanced Nodes

Economic Viability and Scale

1. Capex intensity: Advanced fabs (3–7 nm) demand investments exceeding $20 billion, while mature node fabs cost less than $7 billion, with faster breakeven.
2. India’s electronics market—valued at $155 billion (2023)—depends mostly on mid-end chips used in automotive ECUs, mobile sensors, and power management circuits.
   Hence, focusing on domestic-grade chips ensures demand certainty and economic sustainability.

Technological Catch-Up and Ecosystem Building

1. Manufacturing advanced chips requires EUV lithography machines (controlled by ASML in the Netherlands) and sophisticated IP supply chains India lacks.
2. Starting with mature nodes helps India develop design, packaging, testing, and R&D linkages gradually—mirroring Taiwan’s 1980s phased strategy.
   This “technology laddering approach” builds competence before moving toward advanced nodes.

Supply Chain Security and Strategic Autonomy

1. The Russia–Ukraine war and U.S.–China tech decoupling exposed vulnerabilities in global chip supply chains.
2. Local fabs serving critical sectors—defence, space, railways, and telecom—enhance strategic autonomy, reducing reliance on geopolitical hotspots.

Employment and Skill Multiplier

1. Each semiconductor fab generates 5,000–10,000 direct and 50,000 indirect jobs, according to MeitY estimates.
2. Focusing on mid-level manufacturing integrates India’s Skilling India initiatives (e.g., Chips-to-Startup programme) with tangible job creation.

Critical Challenges and Counterpoints

1. Critics argue that focusing on older nodes may make India technologically obsolete as global demand shifts to advanced nodes (AI chips, quantum processors).
2. However, Boston Consulting Group (2023) notes that mature-node chips will form 60% of global demand even in 2030, ensuring long-term relevance.
3. The key lies in design-led innovation—developing indigenous chip architectures through startups (e.g., Saankhya Labs, InCore Semiconductors) and partnering with global fabs for technology transfer.

Impact on Atmanirbhar Bharat

1. Economic Atmanirbharta: Reduces a $23 billion import dependence, saving foreign exchange.
2. Technological Sovereignty: Enables domestic production for strategic sectors like ISRO, DRDO, and automotive manufacturing.
3. Innovation Ecosystem: Encourages R&D collaboration with academia under India Semiconductor Mission (ISM).
4. Regional Industrialisation: Boosts ancillary clusters in Gujarat, Tamil Nadu, and Karnataka, advancing balanced regional growth.

Conclusion

“The Fortune at the Bottom of the Pyramid”, growth thrives on local relevance. Prioritising market-serving chips empowers India’s Atmanirbhar journey through pragmatic, scalable innovation.