A dependable supply of specialised computer chips has become a critical concern for Indian technology firms such as Bengaluru-based Tejas Networks, which builds equipment that powers mobile phone networks and broadband connectivity. For Arnob Roy, co-founder of the company, these components are the backbone of modern telecom infrastructure, carrying enormous volumes of data across networks that are expected to function without interruption.
Unlike chips used in consumer electronics or smartphones, telecom chips are engineered to manage data traffic from hundreds of thousands of users at the same time. Any failure can have cascading consequences. As Roy explains, such chips must be built around reliability, redundancy and fail-safe operations, making their architecture far more complex and demanding. Tejas Networks designs many of these chips in India, drawing on the country’s deep pool of semiconductor design talent.
India has long been recognised as a global hub for chip design, with estimates suggesting that around one-fifth of the world’s semiconductor engineers are based in the country. Almost every major international chipmaker operates large design centres in India, often working on cutting-edge technologies. However, despite this strength, India has historically lacked domestic semiconductor manufacturing capabilities. As a result, Indian firms design chips locally but depend on overseas facilities to manufacture them.
This dependence became a serious vulnerability during the Covid-19 pandemic, when global supply chains were severely disrupted. Shortages of semiconductors forced companies across industries to slow or halt production, underlining the risks of having manufacturing concentrated in a few regions. The experience prompted policymakers and industry leaders in India to rethink their strategy and accelerate efforts to build a domestic semiconductor ecosystem.
According to officials in the Ministry of Electronics and Information Technology, the pandemic demonstrated how fragile global electronics supply chains can be, with shutdowns in one part of the world quickly affecting manufacturers everywhere. To reduce these risks and improve resilience, India has begun focusing on parts of the semiconductor value chain where it can realistically compete.
Chip production involves several stages. While India already has a strong foothold in design, the most capital-intensive stage—wafer fabrication, carried out in highly sophisticated factories known as fabs—is dominated by companies in Taiwan, with China investing heavily to catch up. Instead of attempting to leap directly into this segment, India has chosen to prioritise the later stage of assembly, testing and packaging, known as outsourced semiconductor assembly and test, or Osat.
Industry bodies say this approach lowers entry barriers and allows India to build scale more quickly. Several assembly and testing plants are expected to reach mass production this year. One of the earliest movers is Kaynes Semicon, founded in 2023, which has set up a semiconductor assembly and testing facility in Gujarat with government support. The company has invested about $260 million in the plant, which began production late last year.
Kaynes Semicon’s leadership stresses that packaging and testing are complex, multi-step processes that are just as vital as chip fabrication itself. Without this stage, silicon wafers cannot be used by industry. Initially, the facility will focus on chips for automobiles, telecom networks and defence applications rather than the most advanced processors used in flagship smartphones or artificial intelligence systems. These so-called “non-glamorous” chips, executives argue, are economically and strategically crucial for India’s domestic needs.
Building this capability has not been easy. From constructing cleanrooms to installing specialised equipment and training a skilled workforce, the learning curve has been steep. Training remains a major bottleneck, as semiconductor manufacturing requires years of experience and a culture of rigorous process control that differs from conventional manufacturing.
Despite the challenges, companies like Tejas Networks see long-term promise in the shift. Roy expects a meaningful semiconductor manufacturing base to emerge in India over the next decade, benefiting domestic technology firms and gradually enabling the country to design and manufacture complete telecom chipsets. While the journey will require patient capital and sustained support, industry leaders believe India has finally taken its first decisive steps into deep-tech manufacturing.
