India now has semiconductor plants producing commercially. That sentence may suggest India is making computer chips from scratch. Sometimes it is not.
Micron's Sanand facility, opened in February 2026, makes semiconductor products, meaning that it engages in assembling, testing, marking, and packaging. Kaynes and CG Semi started this year making semiconductor packaging and testing. The government announced three semiconductor plants became commercially operational by July.
The silicon wafer they turn into a circuit or processor may have come from elsewhere; that is, not produced in India. This does not detract from the achievement, but it makes clear how little the semiconductor supply chain is vertically integrated.
A Chip Is Made More Than Once
When people think about making a computer chip, they often imagine a factory production line: raw elements go in at one end, and integrated circuits emerge at the other. The reality is much more involved: chips are frequently designed in one country, fabricated in another, assembled and packaged in a third, and tested in a fourth. Before reaching the consumer or business, a chip may undergo multiple stops in different manufacturing facilities.
Modern semiconductor manufacturing consists of multiple phases. It typically begins with the design of the integrated circuit (IC). This step is followed by fabrication inside an ultra-specialized semiconductor factory, otherwise known as a foundry. What the foundry produces are silicon wafers with numerous ICs cut out from them. These ICs must then be cut, assembled, connected to other ICs, tested, and finally packaged for use by manufacturers in consumer electronics. This last step is sometimes referred to as assembly, testing, and packaging (ATP) or advanced packaging.
Micron's Sanand factory is an ATP facility, which means that it typically receives DRAM and NAND wafers from Micron's global production network and turns them into finished memory products. The wafer may have been fabricated elsewhere, but an economically significant portion of the production process nevertheless takes place in India.
Packaging Used to Sound Boring
As late as the recent past, semiconductor packaging was viewed as a relatively low-tech step in the IC manufacturing process. That may explain why there has been so much focus on building fabrication plants in India. Modern foundries are undeniably amazing feats of engineering, requiring huge investments in research and development (R&D), highly specialized equipment, and extremely precise control over the manufacturing environment.
By contrast, basic packaging resembles something like fancy shrink wrapping. But simplified packaging is precisely what the chip industry is leaving behind. Advanced packaging is making it possible to connect multiple ICs together to form complex systems or allow a single processor to cool efficiently. As AI applications create demand for more powerful processors, advanced packaging will help meet this demand by enabling close physical connections between multiple chips.
NITI Aayog's 2026 semiconductor policy paper promotes the idea that India should be one of the top three destinations for outsourcing semiconductor assembly, testing, and packaging rather than focusing exclusively on fabrication. The end-market segment is becoming more technologically sophisticated.
India Is Building Both Ends
India is not giving up on fabrication; Tata Electronics is building a foundry in Dholera, Gujarat, which is expected to have a capacity of 50,000 wafer starts per month and receive an investment of over 90,000 crore. Fabrication plants are capital-intensive, however, and require several years before they can begin operating at full capacity.
Meanwhile, the construction of packaging plants can provide an immediate boost to India's manufacturing capability. As of early 2026, the government had approved ten semiconductor projects, worth about 1.6 lakh crore in investments, and additional projects were approved later this year.
This allows India to pursue a dual strategy: design, package, test, and manufacture components and materials locally while also building more domestic capacity for wafer fabrication.
The Factory Needs a Factory Around It
A semiconductor plant is not an isolated entity but requires an extensive supporting ecosystem to function. This includes an indigenous supply of gases, chemicals, substrates, packaging materials, equipment, clean-room infrastructure, test probes, precision instruments, and skilled personnel who can maintain this infrastructure. It is why India's electronics strategy increasingly emphasizes this supporting ecosystem around the "headline" semiconductor manufacturing projects. As of August 2026, the government had approved 106 projects under the Electronics Components Manufacturing Scheme, representing an investment of 69,548 crore. Of these, 38 plants were already functional, and 16 more were in the advanced stages of construction.
The chip manufacturing factory is only one element in this broader ecosystem, the importance of which cannot be understated.
Geography Is the Real Strategy
Geographic concentration tends to accelerate cluster formation, and the global semiconductor industry is no exception. Taiwan, which currently leads the world in advanced semiconductor manufacturing, did not arrive at this position by accident. Decades of accumulated suppliers, engineers, and specific know-how have created an environment in which semiconductor manufacturing can flourish.
The same dynamics underpin the growth of semiconductor manufacturing in South Korea, Japan, or the United States. If India's semiconductor packaging facilities are to play a long-term role in global manufacturing, they must develop their own cluster of suppliers, engineers, and electronics designers.
This is why the emergence of multiple related semiconductor projects in Gujarat matters; the presence of multiple manufacturing facilities makes the region more attractive to potential suppliers and manufacturers.
Self-Reliance Does Not Mean Making Everything Yourself
Semiconductor strategy tends to be binary: either we make everything ourselves, or, if that proves too difficult, we purchase everything from other countries. In practice, however, there is a continuum in between. Semiconductor manufacturing is not monolithic but consists of multiple elements, and each nation or company is free to specialize in whatever it finds easiest.
Chips may be designed in the United States, fabricated in Taiwan, made into consumer electronics in China, purchased by a company in Singapore, and ultimately used by an individual in India. The goal of a strategic semiconductor manufacturing policy is not to achieve complete self-reliance but to ensure that critical elements are available domestically even if other elements remain foreign.
Resilience Is the Objective, Not Isolation
More and more electronic devices will be using semiconductors made, assembled, tested, or packaged in India. Being able to say that something was made in India is a useful goal and a convenient campaign tactic. But what does "Made in India" really mean when it comes to semiconductors? The more important question is what critical elements are manufactured in India.
A foreign silicon wafer that is packaged in Gujarat is not the end of India's semiconductor journey, but it also does not represent its beginning. India does not need to make everything to become capable of controlling its technological future; it needs to make sure that nothing can be taken away from it without warning.