Semiconductor chips or wafers, acting as microscopic switches that control the flow of electrical currents, enabling devices to process information, store data, and communicate, are the fundamental power behind practically all electronic and digital devices today. These are specialized by function and embedded into countless everyday items; used extensively in computing, communications, automotives, energy management and the like.
India’s quest for semiconductors found focus with the INR 76,000 crore (USD 10 billion) India Semiconductor Mission (ISM) established in December 2021 under the Ministry of Electronics and Information Technology (MeitY) to drive India's semiconductor and display manufacturing strategies. Operating as an independent business division within the Digital India Corporation, ISM serves as the nodal agency for smooth implementation of the ‘Semicon India’ Program, supporting companies that invest in semiconductor fabs, display manufacturing, and chip design ecosystems.
India’s earlier attempts, for example, from the Semi-Conductor Laboratory (SCL) fab at Mohali to the SemIndia and Jaypee-IBM ventures, all overseen by MeitY, had collapsed due to lack of market demand or financial closure; indicating lack of a coherent strategy. However, India’s ecosystem is being assembled in parallel. TATA’s Outsourced Semiconductor Assembly and Test (OSAT) facility at Jagiroad, Micron’s Sanand plant inaugurated in February 2026, CG Power–Renesas at Sanand and Kaynes Semicon’s operations since March 2026 provide the back-end support for packaging, testing and integration.
On May 16, 2026, Prime Minister Narendra Modi, accompanied by Dutch Prime Minister Rob Jetten, witnessed the signing of a landmark agreement between TATA Electronics and Netherland’s firm Advanced Semiconductor Materials Lithography (ASML) at ASML’s headquarters in Veldhoven, Netherlands. The partnership between the two companies is expected to accelerate India’s integration into global semiconductor supply chains and reduce dependence on imports.
ASML is a global leader in high‑precision lithography equipment, which is indispensable in the production of semiconductor chips. The US reportedly relies heavily on ASML cooperation. TATA Electronics, a subsidiary of the TATA Group, is spearheading India’s semiconductor ambitions by establishing the Dholera facility, which will be a cornerstone of the country’s technological self‑reliance. The announcement of TATA Electronics INR 91,000-crore semiconductor fabrication facility at Dholera, Gujarat, marks a decisive moment in India’s industrial and technological trajectory.
ASML, the sole manufacturer of extreme-ultraviolet lithography machines, committed to supplying lithography systems, technical training and ecosystem support for India’s first commercial fab, which is being built in collaboration with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC). The facility is expected to produce its first saleable wafers by late 2026. By building domestic fabrication, assembly, and design infrastructure, India aims to de-risk global supply chains and achieve 75% self-sufficiency in domestic chip demand by the year 2029.
According to indigenous media, India is not going for cutting edge wafers of 3nm or 2nm technology but the Dholera fab will focus on 28nm chips, with additional capacity for 40, 55, 90 and 110nm nodes; used in automotive electronics, power management systems, telecom radios, industrial sensors and embedded silicon. Reasons mentioned for this include the following:
- Roughly 70% of global wafer volume sits at 28nm and above, while only 3% lies at 3nm and below.
- All successful semiconductor nations began at the trailing edge of its era and climbed gradually. Taiwan Semiconductor Manufacturing Company Limited (TSMC) began with 3 microns in 1987 and took 35 years to reach 3nm. China’s Semiconductor Manufacturing International Corporation (SMIC) began at 180nm in 2000 and only reached 7nm-class production in 2023. It fails to mention that SMIC has already achieved volume production of a 5nm node, also called N+3.
- Singapore’s Chartered Semiconductor and Malaysia’s Silterra, which either chased the leading edge prematurely or stagnated at the trailing edge without anchors, failed to sustain competitiveness.
- The present market is driven by smartphones, EVs and defence electronics amid geopolitical decoupling from China. 28nm fab costs between USD 10–15 billion to establish, compared to USD 20 billion for 3nm and USD 28 billion for 2nm. ASML’s High-NA EUV scanners, essential for sub-7nm production, cost USD 380 million each, weigh as much as two Boeing 777s and take six months to install.
- The Tokyo-based ‘Renesas Electronics; (semiconductor company that specializes in embedded processing, analog, power, and connectivity solutions) launched its flagship automotive microcontroller at 28nm in March 2026. The US Bureau of Industry and Security found that 80% of chips in modern cars sit between 28 and 180nm. A single passenger vehicle contains between 1,400 and 3,000 chips, and the 2021 global auto crisis was caused by shortages of 28–90nm microcontrollers, not 3nm processors. Maruti Suzuki alone cut production by 51% in September 2021, costing the Indian auto industry around INR 25,000 crore in lost sales. By choosing 28nm, India has arrived at the starting line of a 30-year journey. The chips India actually needs are the ones Dholera will produce.
Speculation is that when Dholera’s wafers roll out, India will have a complete supply chain to absorb them. However, analysts point out execution gaps; only 15% of the Design-Linked Incentive schemes in the FY24 budget was disbursed. Significantly, China’s Big Fund-III is deploying USD 47 billion at 28nm, with SMIC already slashing wafer prices to flood the market. Can India compete with those prices in future?
The US imposed a 50% tariff on Chinese semiconductors in January 2025, with further increments due in 2027, while Section 5949 of the US National Defense Authorization Act (NDAA) will bar federal contractors from using Chinese chips in critical systems from December 2027. Will America soften its stance or not in aftermath of US President Donald Trump’s visit to China? But this is seen as an advantage to India. The Dholera fab that will directly support India’s electronics industry, imported components worth INR 34,000 crore last year. The fab is expected to ramp to full capacity by 2028.
The hubris circulating is that something, which China could not achieve even after spending USD 100 billion was achieved by India with a single visit to Netherlands by Prime Minister Narendra Modi. But this is a blinkered view. ASML does not produce microchips itself. Instead, it designs and manufactures the critical photolithography machines (such as Extreme Ultraviolet or EUV systems) that foundries like TSMC, Samsung, and Intel use to print circuits for 3nm and 2nm chips. ASML holds a global monopoly on the EUV equipment required to manufacture 3nm and 2nm logic chips. Their tools use short-wavelength light to print microscopic circuit patterns onto silicon wafers. For the latest 2nm node processes, ASML produces next-generation "High-NA EUV" systems (such as the EXE:5200). These machines offer higher resolution and allow foundries to fit more transistors onto a single chip.
3nm and 2nm semiconductor nodes deliver massive leaps in processing power and battery life by packing billions more transistors into the same physical space. The primary benefits include unprecedented energy efficiency, reduced power leakage, and computational muscle required for next-generation artificial intelligence (AI) and 5G. We may say that instead of chasing the cutting edge of 3nm or 2nm technology, we are going in for 28nm chips, but it can be safely assumed that sub-5nm technology was not offered by ASML to India, in line with the Western approach of denying critical technology to India.
As to American tariffs on Chinese semiconductors and barring federal contractors from using Chinese chips in critical systems from December 2027, a cartoon describes the situation aptly: Trump telling Chinese President Xi Jinping he holds all the cards and Xi responding by saying you don’t even know the game we are playing!
Huawei just unveiled a 122TB SSD built entirely without advanced Western components, using a proprietary packaging technology called Die-on-Board that mounts memory chips directly onto circuit boards instead of stacking them; resulting in 33% higher density and 80% lower power usage for data transfers, with the technology already deployed in Chinese AI data centres. A 245TB version is already being developed. The US banned Huawei from buying advanced 3D NAND chips from Samsung, Micron and SK Hynix, so Huawei fitted more lower-quality chips into the same space more efficiently than Western competitors.
When Trump offered China USD 30 billion in Nvidia chip sales, China told its own companies to hold off buying; followed by Huawei revealing it built world-class AI storage without a single sanctioned component. America’s export controls, designed to slow China’s AI infrastructure, prompted Chinese engineers to build packaging technology that Western companies don’t have. Chinese engineers worked around the US ban on chips; China doesn’t need those chips now. Little wonder why Xi Jinping refused to meet the planeload of American billionaires who accompanied Trump for his China visit, while the US-Israel continued with their warmongering in West Asia, Gaza and Lebanon.
The author is an Indian Army veteran. Views expressed are personal.
