Chip war highlights India's semiconductor challenges

The Hindu · 28 October 2026 · GS 3: Science and Technology · GS 3: Economy · 6 min read

Why in the News?

At the Semiconductor Summit 2026 in Chennai, experts discussed India's semiconductor vulnerabilities amid the global chip war. Aspirants must understand sovereignty, manufacturing gaps and policy needs.

Key Highlights

• Semiconductor sovereignty means resilience and multiple supply-chain options, not full domestic production.

• Advanced packaging, including 2.5D and 3D, can narrow India's technology gap.

• Indichip Semiconductors is investing over ₹15,000 crore in silicon-carbide devices.

• India's silicon-carbide market may grow from ₹13,000 crore in 2030 to ₹1 lakh crore by 2035.

• Silicon-carbide fabrication needs 37 gases and 42 chemicals, mostly imported.

• GST relief for ecosystem firms was proposed to ease long project lead times.

Know the Basics

• Semiconductor sovereignty: Building reliance, resilience and diverse supply chains, not full domestic production.

• Silicon-carbide: A semiconductor material used in power devices for energy, mobility, defence and data centres.

• Advanced packaging: Integrating multiple chips on a single substrate, including 2.5D and 3D technologies.

• OSAT: Outsourced Semiconductor Assembly and Testing, a starting point for ecosystem-building.

Detailed Analysis

Semiconductor sovereignty and supply chains

• Sovereignty focuses on resilience and diverse supply chains, not producing all components domestically.

• India must reduce dependencies through international partnerships and strengthen domestic manufacturing.

Advanced packaging opportunities for India

• 2.5D and 3D packaging can help India narrow its technology gap.

• Countries like the US are moving advanced manufacturing within borders, creating competition for India.

Silicon-carbide market and challenges

• India's silicon-carbide market may grow to ₹1 lakh crore by 2035.

• Fabrication requires 37 gases and 42 chemicals, mostly imported, creating supply-chain risks.

Policy and ecosystem needs

• Industry status for semiconductors and GST relief can ease financial strain during long project timelines.

• Education in manufacturing, materials and equipment is needed alongside chip design training.

Significance for India & UPSC Exam

• Semiconductor sovereignty aligns with India's Atmanirbhar Bharat vision for self-reliance.

• Advanced packaging can improve India's competitiveness in global technology markets.

• Silicon-carbide devices support energy, mobility and defence sectors, boosting domestic industries.

• UPSC could test this under GS 3: Science and Technology or Economy, focusing on policy and manufacturing gaps.

Challenges and Way Forward

Challenges

• India lacks domestic production of gases and chemicals needed for silicon-carbide fabrication.

• Global competitors invest significantly more capital in semiconductor development.

• Long project timelines strain ecosystem firms under GST burdens.

Way Forward

• Government must grant industry status and GST relief for semiconductor ecosystem firms.

• Educational institutions should expand training in manufacturing, materials and equipment.

• India must diversify supply chains through international partnerships for critical inputs.

• Private sector should focus on domestic value addition to attract global investment.

UPSC Prelims Practice Question

Consider the following statements about India's semiconductor sector:

1. Semiconductor sovereignty requires producing all components domestically.

2. Silicon-carbide fabrication needs 37 gases and 42 chemicals.

3. Advanced packaging integrates multiple chips on a single substrate.

Which of the statements given above is/are correct?

1. 1 only

2. 2 and 3 only

3. 1 and 3 only

4. 1, 2 and 3

Answer: (b) 2 and 3 only

Explanation: Statement 1 is incorrect: sovereignty focuses on resilience and diverse supply chains, not full domestic production. Statements 2 and 3 are correct as per the input.

UPSC Mains Practice Question

Evaluate India's challenges and opportunities in achieving semiconductor sovereignty. (GS 3, 15 marks, 250 words)

Answer framework

• Start with the global chip war and India's vulnerabilities discussed at the Semiconductor Summit 2026.

• Explain semiconductor sovereignty: resilience and diverse supply chains, not full domestic production.

• Discuss advanced packaging as a technology gap India can address to compete globally.

• Highlight silicon-carbide market growth and its fabrication challenges with imported inputs.

• Mention policy needs like industry status, GST relief and ecosystem education.

• Conclude with international partnerships and domestic value addition as the way forward.

Question to Ponder

Can India achieve semiconductor sovereignty without domestic production of critical inputs?

Previous Year Questions (PYQs)

Prelims

• The Government of India has totally banned the export of 'Burnt Coal' (Jhama), because it contains recoverable amount of a metal/element used in transistors. (1993)

• The term 'Domestic Content Requirement' is sometimes seen in the news with reference to (2017)

• At the present state of our knowledge and resources position, India will remain self-sufficient for the next three decades in (1993)

Mains

• India on Global Competitiveness Index-2007. (2008, Paper II)

• Why is nanotechnology one of the key technologies of the 21st century? Describe the salient features of Indian Government's Mission on Nanoscience and Technology and the scope of its application in the development process of the country. (2016, Paper III)

• Explain the implications of the implementation of intellectual property clauses in our patent law regime after joining the WTO. (2006, Paper I)

Frequently Asked Questions (FAQs)

What is the chip war?

The chip war refers to global competition in semiconductor manufacturing, driven by geopolitical tensions and supply-chain vulnerabilities.

What is advanced packaging in semiconductors?

Advanced packaging integrates multiple chips on a single substrate, including 2.5D and 3D technologies, to enhance performance and reduce size.

Why is silicon-carbide important for India?

Silicon-carbide is used in power devices for energy, mobility, defence and data centres, with India's market projected to grow significantly by 2035.