India is due to see the building of its first compound semiconductor fab, as the government recently announced the addition of four new projects aiming to build supply chain resilience and domestic chip production.
Its semiconductor market is forecast to grow approximately $45 to $50 billion by the end of 2025, which will grow to $100 to $110 billion by 2030. Its semiconductor strategy, marked by the release of the India Semiconductor Mission (ISM) in 2021, is now looking to implement large-scale production manufacturing.
The government’s incentive schemes, capital subsidies and investments have all proved fruitful in establishing production manufacturing capacity:
- Direct Manufacturing Incentive (DMI) hands out grants for new and expanding display fabs
- Production-Linked Incentive (PLI) is a performance-based incentive designed to boost its domestic manufacturing sector
The compound semiconductor market, similarly, is growing. According to the Yole Group, it is expected to hit $25 billion by 2030, fuelled by growth in the telecoms, automotive, and mobile sectors. Although this represents a small part of the $1 trillion semiconductor device market, the numbers shouldn’t be misleading: compound semiconductors are key technology enablers.
Following the silicon carbide (SiC) boom, OEMs are demonstrating more interest in Gallium Nitride (GaN) for its increased efficiency and performance capabilities in power electronics.
India’s first semiconductor fab is one of four new projects approved as part of the ISM, and represents a total of approximately $526 million in investment. It will be based in the Info Valley in Bhubaneswar, the capital of Odisha, and will focus on SiC wafer and device production, targeting an annual capacity of 60,000 wafers and 96 million devices.
The products manufactured at the fab will be used in electric vehicles, defence equipment, railways, fast charging stations, data centre racks, consumer appliances, and solar power inverters.
Of the other projects announced, a second will be set up in Odisha as well, creating an advanced packaging and embedded glass substrate unit. The planned capacity is 69,600 glass panel substrates, 50 million assembled units, and 13,200 3DHI modules per annum.
India’s government initiatives have been responsible for attracting investments, promoting self reliance, and improving its global position, we concluded in our Hotspot article. For instance, in its February 2025 budget, India scrapped import duties on critical components used in smartphone production; including PCBs, camera module parts, and USB cables. It also removed custom duties on the waste and scrap of critical minerals, to ensure a steady supply of minerals that are important to semiconductor production; lithium, copper, nickel, and cobalt.
This follows news that the UK and India launched phase two of the UK-India Critical Mineral Supply Chain Observatory where both nations will map critical mineral supply chains, evaluate risks, and identify investment and recycling opportunities. The initiative is backed by £1.8 million of funding.
