Invest2 publishers3 min readPublished
Toolmakers commit the biggest new money at India's Rs 1.27 lakh crore chip phase
Modi said India has moved past policy and plant construction into commercial chip production. The fresh investment announced at Semicon India 2026 came from two equipment suppliers, Applied Materials and Lam Research.
The Investor · Invest desk
What happened
- Modi told Semicon India 2026 that the country had entered a second phase of its semiconductor programme, moving beyond policy announcements and plant construction towards commercial production of chips.
- That second phase, Semicon 2.0, carries an outlay of Rs 1.27 lakh crore and widens the focus from large chip factories to equipment, materials, design, research, supply chains and skilled manpower.
- Twelve projects were approved in the mission's first phase across fabrication, packaging and other parts of the value chain, and three of them have started commercial production.
- Applied Materials announced an India Vision 2035 plan to invest $5 billion, covering R&D, expansion of the domestic semiconductor supply chain and talent development.
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Why it matters
- contradiction The two published accounts put Applied Materials' $5 billion on different clocks: ten years makes it about $500 million a year, five years about $1 billion, and the pace decides how much India-based supply chain it can fund by 2035.
- decision Modi asked industry leaders to lead R&D in the country, so the bill for advanced development work falls to corporate budgets.
- capability Micron's plan to assemble and test tens of millions of chips at Sanand this year and hundreds of millions next year gives memory customers Indian packaging volume they can schedule against.
Lam Research's Rs 10,000 crore is about 7.9 per cent of the Rs 1.27 lakh crore behind the mission's second phase [1], and it goes into silicon ingot production and processing for advanced chip technologies [11]. Sesha Varadarajan, Lam's COO, said the firm would invest the sum "to establish our first silicon component manufacturing facility in the country" [12]. He also said "we are increasing our partnerships with suppliers across India in specialised materials, precision components, gases, chemicals, metrology and manufacturing services" [13].
Applied Materials is buying position upstream as well, with a 140-acre advanced semiconductor research park and a stated aim of expanding its India-based supply-chain capacity ten-fold by 2035 [9].
The urgency comes from the import line. India spent almost $150 billion on semiconductor product imports between FY17 and FY25, an average of about $16.7 billion a year [7][3]. The government puts the growth rate at 23 per cent compounded, which on trend gives $240 billion of annual imports by 2035 [7]. Sustained ten years, 23 per cent multiplies a base by 7.9, so that projection implies an FY25 run-rate near $30 billion [2]. Domestic demand is projected to exceed $200 billion by FY35 [6]. Trend imports therefore sit at or above the size of the market they supply. Demand growth on its own leaves domestic plants no room [6], so they have to take share from imports. SEMI's CEO Ajit Manocha estimated the industry would cross $1.3 trillion this year and $2 trillion by 2030 [20]. That makes India's projected $110 billion of FY30 demand roughly 5.5 per cent of the world total [5].
Micron's Sanand plant is the clearest producing asset in either account. Sanjay Mehrotra, its CEO, said "Earlier this year, we began commercial production at Sanand" [16], and that "Our current production capacity already exceeds the memory required for India's entire laptop market" [17]. The plant is shipping DRAM and NAND to customers globally, and Mehrotra said Indian teams had contributed to more than 3,700 patents, inventions and disclosures [14][15].
The pitch rests on trust. Modi said "The world needs new and trusted locations for chip manufacturing and India is preparing itself for this" [2]. At the same event he said "And today, when supply chains are being weaponised, its importance becomes much greater" [19]. Neither the Indian Express nor The Hindu account of the speech mentioned Taiwan or China [7]. Wayne Allan of ASML said "India will become increasingly important globally" [21]. Infineon's CEO Jochen Hanebeck called India a "market of tremendous importance" and said hiring there was up 28 per cent [23]; the company has more than 2,800 employees in the country [22].
The pledges and the pitch sit at different points in the chain. Ingots, tools, supplier partnerships and research are what got funded at this event. I would expect the phase to register first as equipment and materials revenue booked in India, and only later as wafer output. That expectation breaks if a first-phase project brings logic fabrication into volume production on this outlay. It also breaks if the upstream spending pulls Indian suppliers into the toolmakers' own purchasing fast enough to bend the 23 per cent import curve [7].
What to watch
- Whether the count of first-phase projects in commercial production moves past three.
- Whether the one lakh workers Ashwini Vaishnaw said would be trained are hired into the plants under construction.
- Whether reported semiconductor imports break from the 23 per cent compound trend before 2035.